In this episode, we are talking to Dennis Hursh, a physician focused attorney. In today’s interview, Dennis reveals why he tells his clients:
- The standard physician employment agreement is a mythical creature
- Don’t sign a letter of intent intending on changing the terms when you sign the employment contract
- Don’t be afraid to negotiate – if they’ve made an offer to you, they are serious and usually will negotiate
- The meek may inherit the earth, but they rarely obtain the best compensation packages
Josh Mettle: Hello and welcome to the Physician Financial Success Podcast. My name is Josh Mettle, and this is the podcast dedicated to advising physicians how to avoid financial landmines. Today, we’ll be talking with veteran Pennsylvania-based physician’s lawyer Dennis Hursh. Dennis leads Hursh & Hursh, P.C., with over 25 years of health law experience and is also the author of The Final Hurdle: A Physician’s Guide to Negotiating a Fair Employment Agreement.
I’m really looking forward to today’s conversation. Dennis, welcome to the show and how are you today?
Dennis Hursh: I’m just great, Josh. I’m looking forward to it as well.
Josh Mettle: Well, this is the season, right, ‘tis the season. As we record this, this is the beginning of March. I’m excited to uncap all – at least some of what you can distill down into 30 minutes in this call and I know that our listeners are going to find it useful. The first thing that I thought that I might ask you Dennis is, I always find it fascinating how people come to serve physicians.
As I was researching you and reading some of your literature, I came to find out that you had an incident with your oldest daughter. Is it Rachel or Rochelle?
Dennis Hursh: Rachel.
Josh Mettle: Rachel, okay, and that had an impact on your career path. Would you mind just sharing that story with us?
Dennis Hursh: Not at all. Rachel is a miracle child. Well, not literally, there’s that group that ‑ it’s not me saying that she can go to the parties and stuff. She’s been designated a miracle child, but she has DiGeorge syndrome. In her many, many, many hospitalizations when she was young, I kind of came to realize and appreciate what docs do.
I especially remember one night in the early ‘90s where both the critical care fellow and the cardiology fellow literally never left her side the whole night. I was already doing some work for physicians then but really that night, I decided that I was just going to focus on representing physicians, and I never really looked back since then.
Josh Mettle: That’s a beautiful story. How is Rachel now?
Dennis Hursh: She’s doing great. She’s in a group home, but she’s very, very, very happy and she has a one-on-one aide that helps her go to a farm, so she’s a farmer.
Josh Mettle: That’s great! I love it.
Dennis Hursh: She loves it.
Josh Mettle: Well, great happy ending and what a great way to get started serving physicians. As I mentioned as we record this, we’re 3 days away or 2 days away from Match Day and I imagine that there are physician employment agreements being printed and sent out by administrators as fast as they can get them out. Today let’s just focus our conversation if we could on employment contracts and what our listeners really need to know.
I think many listeners will be surprised by one of your quotes, which was, “The standard physician employment agreement is a mythical creature.” I had to read that twice, but it surprised me, so tell us what you mean by that.
Dennis Hursh: Well, I honestly don’t know how many physician employment agreements I have reviewed. It’s in the hundreds since the ‘90s, but I can tell you precisely how many employers have refused to make any changes at all on the contract and that number is zero.
Josh Mettle: Wow!
Dennis Hursh: Yeah, now it’s just literally now, some make major changes. My best is I just had a doctor sit down with the CEO of a hospital and went point-by-point through the four-page letter and got every point but one.
Josh Mettle: Wow!
Dennis Hursh: I wish I could say that’s standard. That’s freakish, and that’s why it struck me. But I’ve literally never had a contract where they came back and said, “No, this is our standard contract. We will change nothing.” Some major health systems will only change a couple of points. A lot of smaller hospitals depending on the specialty will really make a lot of changes to those agreements.
Josh Mettle: That is absolutely shocking to me. I had no idea. We review a lot of employment contracts as well when we’re doing mortgage loans for our clients. What sticks out to me, Dennis, is when I start to ask them questions prior to them sending me the employment contract, how glib most physicians are in regards to the terms of that employment contract, in terms of even as simple things as, are you W-2 or you’re going to be 1099’d. Many don’t know the answer to that question, and it can have profound impact not only on taxes but one’s ability to qualify for a mortgage loan within a couple of years.
I find it interesting the lack of understanding of those contracts #1 and #2 the fact that you can provide an overview and knowledge about the contract but then negotiate so many of those points is very, very interesting.
Dennis Hursh: Yeah, I know it is. It’s shocking to me how many people sign what’s presented to them.
Josh Mettle: Yeah, yeah and just take it as gospel and move on.
Dennis Hursh: Yeah, yeah.
Josh Mettle: Let’s start with the kind of a first step. So typically a physician will first receive a letter of intent. That’s just kind of an overview of the major terms of the employment agreement. And so what do physicians need to know about agreeing to these original terms and the letter of intent and what should they be doing in terms of seeking advice at that point?
Dennis Hursh: Well, you’ve got to understand that a letter of intent is just intended to make sure you’re on the same page before we go into the formality of drafting a big – there’s no sense doing a 50-page contract if you and I don’t agree on what we’re going to pay you.
Josh Mettle: Right.
Dennis Hursh: All the rest is irrelevant. If you want twice what I think I’m going to pay, there’s no sense going forward. Letters of intent are generally not legally binding, but you have to remember they are set there so that we are on the same page. For example, if I say your compensation is going to be $210,000 and you sign a letter of intent, I am not going to expect you as the employer to come back and say, “Well, $210,000 it’s a little light for my specialty.”
You said and so many times, I have physicians come to me and say, “I signed this letter of intent, but it’s not legally binding. I’ve agreed that I’m going to accept this compensation, but I really think I should get more.” Honestly, once you’ve signed something in a letter of intent, you should assume that that term is now off the table. Yes, it’s not legally binding, but as I said if we’ve agreed that this is the number for compensation, don’t expect the fact that the guy that handed it to you said this is not legally binding, don’t think that you’re going to be able to negotiate that term and that’s the biggest thing that I see people doing.
I think the time that you need to have a professional look at it is if there’s something in there that you’re not entirely comfortable with. If they say this is your salary, and you say yeah that’s great, and there’s three or four points, this is the vacation whatever. You look at them and you say, “Yeah, that’s all fine.” Then you’re probably okay signing it, but as I said if you think the salary is a little light, then don’t sign it and in and get some weasel language in there and lawyers, as you know are wonderful weasels, though. Bring them in.
Josh Mettle: My mom is an attorney, so I feel like I can make all the attorney jokes I want because I love her, and she lets me. I love it. I’m just kind of putting myself in the position of let’s say I’m coming out of residency or fellowship and I’m taking my first attending position and I get this offer letter. I’m excited at this stage in my life that I’m in. It’s been a very long journey and now my first real offer letter is in my hand.
Do you find that sometimes there’s just maybe a lack of courage – maybe courage isn’t the right word – but just the lack of there’s got to be some element of fear that would go through my mind. Certainly there’s going to be some trepidation about countering or objecting to the terms in one’s offer letter, especially if it’s your first offer letter. What advice would you give a young physician who’s thinking of countering that letter?
Dennis Hursh: Well, I think you have to realize that they don’t just do this. This isn’t like monster.com where there’s a million in and they say, “How about we bring in a thousand people to interview and start weeding it down?” If they’ve made an offer to you, they’re very serious. They’ve spent a lot of time and that’s probably physician time, not staff time. Physicians have done an awful lot. They’ve probably interviewed you. They’re probably at the point where they’re really have decided that you are the person.
Don’t feel like there’s a million physicians out there. “If I say no, they’re going to go to the next one in line.” They’ve already invested a lot of time and money in you to get to that point. You should not at all feel like, “I’m lucky to have this, and if I don’t accept it just the way it is, they’re going to shoot to the next person.” It just never works that way. They want you. Not saying that you may not be able to come to an acceptable agreement, but they’re very committed to you by the time they give you an offer letter.
Josh Mettle: Dennis, that’s an excellent point. They have a role or a position to fill and they’re moving on and it’s easier to come to terms than it is to start the process over. That’s a great point.
Dennis Hursh: Yeah, absolutely.
Josh Mettle: There’s a quote in your book, and I believe you say, “The meek may inherit the earth, but they rarely obtain the best compensation packages.” We’ve touched a little bit about that but tell us what you mean specifically about that.
Dennis Hursh: Well, I think physicians it kind of rolls into the last point, but you should never assume that a contract is carved in stone, and one of the things that people generally are going to be a little bit flexible on are benefits. You should always ask about things if it’s not in there now about medical school debt repayment assistance. Is there a sign-on bonus? What about moving expenses ‑ dues, hospital dues in particular but also society dues? What about the costs for board certification or recertification?
If you ask for them, you’re not going to get all of them, but the point is you definitely won’t get any that you don’t ask for. You always have to go back and at least do the ask. As I said, if it’s not in there to begin with and you don’t ask for it, then obviously you definitely won’t get it. You may not get all of it, but you’ll probably get something if you’ll just ask for it.
Josh Mettle: It’s like my grandmother said. You know she was married for 50 years, and I said, “Grandma, what does it take to be married for 50 years?”
She thought very quietly oand very stoic and she said, “Pick your battles wisely.” That’s what it sounds like you’re saying. You surmised the entire contract. You picked the places where you really want to take ground, and then you move forward on those with courage and conviction.
Dennis Hursh: That’s right, but again usually my first is I ask for the world. You’re not going to get it all but they will give you something, but they definitely won’t give it to you unless you ask.
Josh Mettle: That leads me to my new question. What are the most common areas where you see them giving ground? If you’re going to ask for 10 or 12 points, what are the ones that you really see hospitals capitulating and give ground on?
Dennis Hursh: Well, this is the classic attorney answer. I know it drives everybody nuts, but it depends. Honestly, I found that as you negotiate a lot of these agreements as I have, the negotiable issues really vary among employers. Some are very, very carved in stone on certain benefits. Some are very flexible on that. A lot of them are willing to have some flexibility in compensation, but some don’t.
Really you start to see [inaudible] a lot of them and it kind of comes down you need somebody that’s experienced that can kind of say, “I know this health system. I’ve gotten this health system to move in the past, so I know we can get some movement here.” Maybe I’ve done four or five contracts with this health system, so I know that they’re not going to give on this point. Unfortunately, I can’t give you a one-size-fits-all that always works, but as I said before, there’s always going to be something that you can negotiate in all of the contracts.
Josh Mettle: I think that was a great response. The answer is find an expert because the expert is going to know where to take ground and it depends on where you’re going to work for. Is that right?
Dennis Hursh: Yeah, absolutely.
Josh Mettle: Okay, well said. Okay, so this is one that I would guess 99 of the physicians miss and you mention that the restrictive covenant is one of the most important aspects of a physician employment agreement. Can you tell us what we need to know and what the risks are that surround this area of the agreement?
Dennis Hursh: Yeah, the restrictive covenant basically says that you can’t work within some area for some period of time. Obviously you go to that job and it sounds like it’s great and they seem like nice people but not every position works out. You always have to look at it and say, “If this position doesn’t work out, am I going have to move?”
Now maybe if you’re single right now, moving isn’t a big deal, but what about in a couple of years? You’re married and you have kids in school and you’ve developed a practice and you like this area, you really don’t want to have to move out of the area and start over again if you leave the position. You have to look at it very, very closely.
One of the things that I think a lot of physicians get wrapped up in is the legal technicalities. There are restrictions. It has to be reasonable as to the area. It has to be reasonable as to the time period. They’ll look at that and say, “They’re never going to enforce that.” I mentioned in my book, The Final Hurdle, an instance that I had where a hospital had a 65-mile radius‑
Josh Mettle: Wow!
Dennis Hursh: Around the hospital that said you cannot practice medicine within 65 miles. I had a very senior attorney, very active in the medical society, very much respected that got an offer from a hospital that was 63 miles away. I was talking to the general counsel of the hospital. We both agreed that the current employer would be crazy to try to enforce this covenant because if they took it in and they lost, now all their physician employment agreement, restrictive covenants will be up in the air.
We both agreed they would be nuts to push it. This is not the one to push it – 63 miles away. They’d be crazy to push it. We agreed that but the bottom line was they hired somebody else because I called back the counsel and asked him why, and he was very upfront.
He said, “Look, we don’t want to go to court. Yes, we think we’d probably win but we don’t want the hassles of being stuck in court and slogging this out, so we hired somebody that was right out of training. You know we would have loved to have your guy, but this guy didn’t have the baggage.”
You have to realize that whatever it says, you should assume that the market will enforce it. Maybe if you went to court, you could fight it, but in fact most likely, new employers are going to look at it and take it right on its face no matter how unreasonable it is. They’re going to say, “We don’t want to go to court. We don’t want to fight this out. This is your problem, and we’re going to hire somebody that doesn’t have that baggage.”
I think that’s the biggest thing, and I have people all the time saying, “Well, they can’t enforce that, can they?”
Honestly, a lot of times the answer is no. I believe they probably couldn’t enforce that, but that’s not the right question. The question is are you going to be able to get a job in that area, and the answer to that question is probably not.
Josh Mettle: That’s such insightful, I mean as a young man taking my first job, I would never have thought well, it may not be a big deal for me to pick up and move now, but when I have a 3- and a 5-year-old ingrained in local schools, it’s going to be a huge deal if I’ve got to move 50 miles away. Again, the only way that a physician could ever have this sort of insight is to have gone through the process dozens of times, and I think to have your oversight and your experience is priceless.
I want to thank you. I want to thank you for your time and for sharing so generously with our listeners today and I think our listeners should get your book. Let’s just talk a little bit about where they can find you, how do they contact you, and where can they get a copy of your book, Dennis.
Dennis Hursh: Well, it’s on Amazon, Barnes & Noble, all of those. The book has a website, thefinalhurdle.com. My website is at pahealthlaw.com. My email address there is Dennis, D-E-N-N-I-S, Dennis@ PaHealthLaw.com. They can always call me. My number is (866) DOC-LAW1, (866) D-O-C-L-A-W-1, and I’m always happy to talk to physicians.
Josh Mettle: Dennis, thanks again. It was a pleasure and we look forward at connecting again with you soon.
Dennis Hursh: Okay, it was a pleasure for me, too, Josh.