In this month’s Spotlight interview, we talked with Jon Appino, founder of Contract Diagnostics. He and his team specialize in providing comprehensive consulting to physicians and their families on employment compensation and physician contract reviews.
When we first met Jon, we knew we immediately wanted to introduce him to our community. First and foremost because we wish we knew someone like him after residency as we were working on contracts. Second, Jon puts so much heart into his work and his clients, you can tell he loves what he does and genuinely wants to see physicians and their families secure the best contracts. Third, Jon’s energy and love of life is absolutely contagious. If you have the opportunity to talk with him, take it.
We hope you find this interview a helpful resource as you encounter new physician contracts or even if you’re reevaluating the old one.
- About Jon Appino, Contract Diagnostics
- What Contract Diagnostics does for physician families.
- How Contract Diagnostics is different from other physician contract review companies.
- 3 things to consider when presented with a new contract.
- Red flags when looking at physician contracts.
- Compensation Rx and how it helps ensure fair pay for physicians.
- Best advice for negotiating a new contract.
- Contact information: Contract Diagnostics
Jon, can you share a bit about yourself and how you got into working with physician families on contracts?
It kind of came out of need. I’ve had a track record of small business ownership in the past and experience in healthcare. I was going to be a physician, pre-med in undergrad. I thought being an Emergency Medicine physician sounded like so much fun, but my mother was a physician and I was dissuaded from going into medicine. I thought of a different path, so I worked in healthcare biotech and pharmaceuticals and worked on contracts. I got to meet a lot of great physicians and I saw a need for how we could help them.
We started with New Cloud Medical, actually the parent company, which was going to reinvent recruiting and life insurance, retirement planning, relocation, and contracts. I realized you can’t do everything world-class, so I said, “Let’s find one thing that we like”. The contract piece was probably the one that we made the least money on but it was the most fun for us and a way we could impact the most families. So we created Contract Diagnostics.
We didn’t see a national brand in the space and we wanted to put together something where a physician in Texas or California, a dermatologist, trauma surgeon, or a pathologist in Montana could call one company and get the answers they need on their employment contract. What’s typical? What’s not typical? What compensation looks like? And it wouldn’t just be a quick check and a red line that’s emailed to you. It would be a comprehensive discussion and coaching so they know exactly what they’re signing and how to have a conversation with the employer.
We’ve had a fantastic run helping out tens of thousands of physicians throughout the years and we just really enjoy what we do here. It means so much to us.
Can you tell us what Contract Diagnostics does for physician families?
I always say it’s simple, not easy. We look at contracts. That’s it. And we talk to the physicians about them. We encourage spouses to join, whether they’re a physician or not, we know how important a team can be.
We discuss [the contract]: Here’s what it says. Here’s what it doesn’t say. Here’s what’s typical. Here’s what’s not typical. We answer all of their questions. We provide compensation data and then, during the call, we provide coaching.
Physicians are scientists, not salespeople, not professional negotiators. So we take time to say, “Here’s how you could say that.” We have a compensation Q&A we send after our time together with 15 or 20 questions about compensation. Not about how to ask for more, just how to ask questions that will lead you to a question that could be, “Can I have more”.
So we look at contracts, we coach the families, we tell them what’s normal, what’s typical, and then hopefully get them better deals with less risk over time for their employment.
Tell us how Contract Diagnostics is different from other physician contract companies.
First I’ll just say- anybody who has a contract should get it looked at. If it’s with us, with the attorney in their state, with a different company. As long as someone’s looking at your contract who knows what they’re doing, that’s the most important thing.
We’re a little different. We’re not a law firm. We’ve got great attorneys that work here, but we don’t provide legal advice and we don’t redline contracts, which we feel is better. Most employers don’t want a redline version of the contract emailed to them because a lot of employers won’t change things. We feel it’s better if we spend an hour (our cheapest package) on the phone with our physicians and send them a comprehensive email. We don’t just send them a redline copy of the contract and never talk to them. So our process, we feel, is much more holistic, much more comprehensive.
We spend a lot of time discussing compensation and benefits. We’ll coach them on how to have that conversation with the employer and then, depending on which package they choose, we can even have the conversation if they don’t want to or feel uncomfortable. They can call us or email us and send changes over as much as they want. We don’t send any extra invoices for that. It’s a flat fee.
One other thing we do, that we started a long time ago with the help of residents and fellows, is the idea of ‘flex pay’. A lot of residents might not have $700 for a contract review, so you can ‘flex pay’ where you put $200 down and pay interest-free over, for example, the next five months at $100/month. So it’s a way for a resident or a fellow without a lot of income to get the comprehensive review that they deserve, they just don’t think they can afford it. So we put some of those things in place that makes us much, much different than other firms.
On top of that, our compensation data is world-class. We have big, national databases but we have our internal, raw database. There’s no selection bias and it’s real-time, so if we do a cardiology deal in Chicago today, you can know (not the specifics) what a cardiologist in Chicago is getting paid tomorrow. We don’t have that 12 to 18 months delay like you might see with MGMA or AMGA or another data set. Our data is just much more granular, much quicker, and much more up-to-date than some of the big national databases.
What are three things to consider when you’re presented with a physician contract?
As you’re going on with the review process, the negotiation if you will, do it in a way that it’s not a ‘you versus them’. I always say there’s not a winner and a loser. If you say, “I want $10,000 more” and they say no, it’s not that you lost and they won. Or if they say yes, it’s not like you won and they lost. I tell everyone to look at the process with the same goals- the physician and their family feels they’re a good fit for the community and the hospital thinks the physician and their family are a good fit for them. The hospital has patients, the physician has skills. The hospital wants to pay the physician, yet retain money to pay their staff and invest more into the facilities. The physician wants to earn a good living to support their family. So everyone has mutual goals.
So we look at it as not ‘you versus them’, but how do we have a conversation together to get my questions answered? This might include asking for changes to get from where we are now (a draft) to a final agreement that I can live with that meets both our needs and expectations.
Number two and three are to make sure that the expectations from both parties are very clear. The expectations on their end, which means you’re going to work for them, so your schedule, your location, all of that should be very clear in the agreement. Then the other thing is your expectations of them. They’re going to pay you, they’re going to give you benefits, they’re going to buy your malpractice insurance. It’s good to have all those things detailed as well.
I always say contracts are for expectations. I use the example: if it’s a real estate transaction, I’m going to sell you my house on Friday and give you the keys. You’re going to leave me X dollars and if you want me to leave the barbecue or if you want me to leave patio furniture, then that goes in the contract. Jon will leave the barbecue and the furniture, and Elizabeth will leave an extra X dollars.
It’s no different from an employment contract. Expectations matter, so your expectations of them, their expectations of you, and then of course making sure that it’s looked at as a team process (not you versus them). Those are three global things that I would say people should go after when looking at a contract.
I’d like to know about any red flags to look for when you’re looking at physician contracts.
I would say a red flag is if one of the important things is not crystal clear. So compensation, right? If there are discretionary bonuses, I don’t know what that means. If it’s a one-year guarantee and then the compensation is to be determined? I want to know how they’re setting it.
If there are no clear expectations on salary, maybe there’s no salary, maybe you’re just paid a percent of collections. We don’t even know when your first paycheck will be or how they’ll pay you on termination or if you’ll make any money. You can make $100K or $500K depending on how busy you are, how good you are at coding, and their billing and collection procedures in the clinic. So making sure that compensation, whichever form of structure they have, is very, very clear and there’s no wiggle room.
If there are to be changes, there should be plenty of notice, 90 days notice or so, with mutual consideration. An employer should not be able to unilaterally change compensation in a short window like 30 days.
I think the other red flag will be not having malpractice insurance very clear. The last thing a physician wants to do is get in a fight at the end of the contract with who’s buying malpractice insurance. Most likely, if a physician leaves, their next employer will require them to prove that they’ve got prior acts. So if an employer’s requiring it, you have to show it. Now if the hospital or the employer from your prior job is saying we’re not going to pay for it, you can’t show it’s there unless you buy it. So it is very important to have malpractice insurance clear. What type of policy? What are the limits? If there’s a patient compensation fund in the state, will you be enrolled in it? Who buys tail insurance? In which situation, every situation, or no situation? I think tail insurance is very important.
Finally, of course, make sure you understand how to get out of the physician contract so can you terminate it. When and how long does it take? Then how much you’re paid on termination. If you’re in a collection structure or RVU structure, are they different? Then any post restrictions covenants like a non-compete, understanding what your risk is if it doesn’t work out there.
I know you have a new product called Compensation Rx. Can you tell us a little bit about what it is and how it’s helpful to the physician family community?
We started this company to help physicians, not really to make money. So we thought, how can we take what we’ve learned over a decade and help more people? I’d say there are around 950,000 physicians in America, but the vast majority of them don’t have contracts to look at every year so they’re not even potential clients of ours. How do we help those families to make sure that they’re being paid fairly, they’re not experiencing burnout, they’re enjoying their job, and their schedule is okay? How do we coach them on having conversations with their employers if something’s not right?
The hospitals can hire consultants for $25K a pop that could tell them how to pay the physician. Then they’ve got the power and knowledge about fair market value, RVUs, and everything else. The physician is kind of a pawn. So we thought, let’s see what we can do to balance the table.
We take a physician, we don’t look at their contract, but at their structure for compensation. We hop on the phone with them and ask them about their story. Maybe they’ve been there for five years, maybe they’re leaving and they want to know what the market looks like in a different area. We can evaluate their compensation: they made this much last year, they produced this much last year, they’ve got this much vacation, this much retirement matching, and this much CME. With the Compensation Rx database, we can show them the data, and then we can talk to them about how to have a conversation with the employer.
I worked with somebody last Friday producing at the 78th percentile. They were being paid at the 57th percentile. So if they’re producing at this level, but being paid at this level, there’s a disconnect. The physician had no idea because they didn’t have the numbers. They just thought, “I’m busy, I’m working, and my paychecks are pretty good.” But we thought they were severely underpaid. So how do we coach them to go to the employer (or we could do it for them if they’d like) and say, “I have information that shows that I should be paid more. What can we do to fix this problem?” In a very kind way, of course. We’re trying to take what we have and the knowledge we have and share it with the 950,000 other people.
It’s like getting your oil checked on your car, or doing routine maintenance on your home. This is how you earn money. You should be able to invest in this process every other year and we put a price on it under $300. Everyone’s always telling us we should double or triple the price, but again, that’s not the point. The point is to help people. So it’s not even $300 and you get half an hour of our time and all of our data I think every physician in the country should have.
Do you have any best advice for negotiating a new contract for someone fresh out of training?
For a brand new physician contract for a new grad, I would say- the first one definitely matters. Some people say, “I didn’t have my first contract looked at because I figured this is just my first job for a couple of years and then I’ll get my next one reviewed.” Not a great idea because you could have a financial issue with your first contract that could set you back hundreds of thousands of dollars that could completely derail your financial future for the next decade or more. So that’s number one.
Number two, make sure everybody has it reviewed by somebody, and make sure you ask a lot of questions. If they tell you that it’s non-negotiable or they tell you that it’s standard terms, still have it reviewed to understand the risk you will have. I’ve had conversations with employers that have told me upfront the compensation is not negotiable. I’ll say that’s fine, but we’ll talk about compensation for 40 minutes because I want to know how they set it, how it changes, what the others make, what it’s been in the past, and any headways that they see. There are so many clarification and due diligence questions that we can ask about the contract without “negotiating” it.
So, what should a new grad look out for? I would say 1) make sure you have it reviewed and 2) ask a ton of questions.
I do also think it’s a good idea to have lots of interviews because nobody’s good at interviews unless you interview all the time. Set up a bunch of interviews, have a bunch of offers, even if you don’t even care about three of them, they might help you with the one that you do care about.
Where can we find you?
If you go to our website, ContractDiagnostics.com, you will find all kinds of great tools. We’ve got free downloads, a top 10 red flag download, you can set up a free 15-minute call to talk about your situation and get our packages, you can just download our packages, you can text our system and have a conversation. You can call the 800 number. You can literally interact with us in any way that’s easy for the physician. So they can head over to our website and just check out what they want there. We’re here to help.