Recruitment — all businesses from the baseball diamond to the stock market square are reliant upon its success as they scout and barter with the best talents proffered by the disciplinary jowls of a grinding academic curricula.
But some of the most rigorously prepared potentials never stand atop a pitcher's mound or beneath a glowering teleprompter on the trading floor. Rather, résumé in hand, they approach primary care offices across the country prepared to take their swing at greatness in the prestigious arena of healthcare.
Up-and-comers in the physician market have been freshly minted with the most extensive training and education a profession can buy. Thus, as Jacob Landford, MBA, a financial advisor at Martin/Wight & Company, LLC, articulated in his seminar at the 2012 New England Clinical Symposium (hosted by the Maine Primary Care Association on Aug. 23), a significant amount of forethought is required of practices looking to hire such staffers.
Landford’s first line of business — don’t be afraid to get em’ when they’re new to the scene.
“We have about 4,500 physicians throughout the country that we work with…and most of them come to us when they’re coming out of training,” he said. “So they’re coming out of residencies, finishing up fellowship, [when] we begin to work with them. It gives us a little bit of a unique insight because we get to them at the beginning of the career.”
Drawing from his experience with such a high volume of eager recruits, Landford divulged two areas physicians are particularly concerned with at the contracting level when beginning their careers.
1) A mortgage of the mind
It’s loan-ly at the top, after years of training both in the classroom and in residencies. As such, Landford noted that the first thing physician employees look for when deciding upon a job is which practice will help alleviate their crushing student loan debt while also allowing for them to live well.
“The biggest thing when they’re coming out of training, that one thing that’s on their mind, and the one thing that’s on all of our minds, if this is the case, is ‘I’ve got a ton of student loan debt’. The average client comes out and they have about $150,000, on average. This is a big deal now and it’s a bigger deal now than it has ever been before,” Landford said.
The financial advisor then broke the argument down into brokerage terms: “Now you can get a mortgage if you have good credit for 3.5 percent [interest]…student loans are 6.8 percent. That’s a huge issue. So if you have $100,000 of student loans and you come out of training and it’s time to start paying them back, your first roughly $600 a month that you pay is just for interest. And when they look at it and they say ‘I’m going to go out into the workforce and I’m going to start making money’ the problem is that they have a mortgage already, right here in their student loans.”
Given this mortgage without the tangible picket-fenced colonial, practicing hopefuls are more interested in how a PCP, through their compensation package, could help lift the burden.
“When they look at compensation packages and stuff like that this is the biggest thing that’s on their [minds] and the one area where there’s some hope for this for a lot of physicians is in primary care,” Landford said. “The reason is that there’s a lot of loan programs available to them — there’s loan forgiveness programs both at the federal levels and state levels; there’s loan payback programs based on where they’re practicing and what type of practice it is. Those are huge for them. There’s also different things some practices will do in recruiting physicians, where they will offer to help payoff student loans.”
When a practice agrees to aid in the repayment of student loans, it applies and begins to tighten what Landford calls “golden handcuffs” to the new employee, presenting to that physician a necessary incentive while also ensuring for the practice a more long-term addition to their team.
“Practices will put these kinds of golden handcuffs into their contracts to try to retain that physician so that they don’t come, work for a little while and then go,” Landford explained.
2) Retirement, Roths and raises, oh my!
Landford also covered retirement plans and what exactly a practice could do to make sure its options are up to snuff.
“The second thing that they’re (physicians) going to look for is what kind of benefits are they going to have. And we’re all aware of the normal benefits of healthcare, dental, vision, all of that. More it’s around my second biggest concern, which is combined — it’s taxes and it’s retirement income sources,” Landord remarked.
He quickly expounded: “There’s been some interesting things that have happened in the last few years around this. One is that we’ve kind of realized that our tax rate is too low and we have to raise it, or we have to get rid of a lot of government programs — one or the other. And we’re probably not going to get rid of those government programs, [whereas] taxes are going to go up. So everybody is concerned: ‘Where am I going to end up tax wise in the future?’”
The two popular choices are 401K and 403B retirement plans, both of which require the employer to match funds put in by the employee, but an option to profit-share is restricted to the 401K only. Employers can use these plans to once again apply the golden handcuffs by enrolling the employee, but not having to pay out until at least a year has passed.
“The reason that physician practices usually want you to wait is part of the golden handcuffs thing in a different way. You’re not giving them anything up front, what you’re telling them is we’re not going to let you into the plan until you’ve been employed here a little while; we want you to stick around before we start putting money into your plan for you,” Landford said.
Landford suggested that, because most training programs end on June 30, if a practice means to hire a physician out of residency and the employee wishes to have a gap period before working that ends after the July 1 benefits induction, the practice should label the employee's start date as July 1. This will allow for the physician to not have to wait 18 months as opposed to 12 before the practice will begin to match their retirement plan.
The last tidbit Landford advised physician practices to heed was the option of adding a Roth provision to IRAs.
“You can add a Roth provision so that any employee, whatever their contribution is, goes to the Roth — they pay taxes on it now, they never pay taxes on it again,” Landford concluded. “This is important for physicians because they make too much money typically to be able to do a Roth IRA. At some point in a physician's career, they’re above those limits for Roth. This is a way that they can do it so that there are no income limits with a 403B or 401K with a Roth provision.”
Implementing a Roth provision to a contract requires a one-time fee; thereafter, the practice can offer it to any contracted employee.