Do hospitals pay off student loan debt for doctors? If a doctor gets a job with a hospital or healthcare network, can that organization pay off the student loan? Well, the answer to that is yes, they can. The better answer is how often they do that. And then how is it structured?
Student Loans Debt for Doctors
I would say it’s rare for any organization to agree to pay off student loan debt for a physician. It’s probably say less than 20% of the contracts I’ve reviewed include student loan payments. Also, there is easily a cap on how much the organization is willing to pay. I will say 150,000 is probably the max that I’ve seen. Usually, it’s somewhere between fifty to a hundred thousand.
How Student Loan Forgiveness is Structured
Let’s talk about how that is structured. It’s usually one of two ways. One, if a physician signs an employment agreement with the hospital or network. There will be language that says, we will provide you with this amount of student loan repayment. In that case, the physician is typically not just handed a check, then they pay off the student loan. The organization will pay an amount directly to whoever the physician has a student loan with.
Pay Student Loans Through Staying With the Hospital
The two most common ways it’s done is the organization simply cuts a large check, so a hundred thousand dollars. Then they will pay that directly to the student loan provider. The physician would then have to stay for a period. Or they would have to pay back an amount of that money.
An average amount would be anywhere between two to four years for student loan forgiveness. How the hospital would forgive that would be, let’s say it’s four years. Every month the physician stays with the employer, the employer would forgive 1/48 of that student loan forgiveness. It means that the hospital would forgive 1/48 of 100,000 every month. Then they would work until it was gone entirely. That’s one way of doing it.
Hospitals Can Pay Medical School Debt in Parts
The other common way of doing it is the employer will just set a standard amount. Let’s once again just say $100,000. They’ll say, alright, over three years, we’ll pay 1/36 of that $100,000 monthly directly to the loan provider. The benefit is that the physician doesn’t have to worry about paying anything back. The downside is, with interest, it just makes sense to get a big chunk up front, and pay it all off. Then the principle that interest is being drawn from is much smaller immediately.
Now, if a physician goes into a job and they’re not sure they want to stay there for a while. They may leave after a year or two. Then it might not make a lot of sense to take a huge lump sum upfront and must repay it. There are some tax implications with that. I mean, it’s a mess, so it depends upon the physician’s situation. If they’re confident they’ll stay in the community, there’s no way they’ll leave. In that case, getting that big lump sum upfront makes complete sense. If someone’s iffy than the other, the monthly amount provided to the loan company would also be a better option.
Student Loan Repayment Unlikely in Private-Owned Practice
You can certainly ask for loan forgiveness. It’s improbable that if the physician gets a job with a private physician-owned group, they will get student loan forgiveness. That’s just reality. Most of the time, a hospital or healthcare network provides student loan forgiveness. So, that’s one thing to think about.
There are also some benefits of working for federal programs. You have the PSLF. Google that, and I’ll go through that in a later video. But working for a federal provider is another way of getting your student loan paid off quickly. Well, not quickly, but a better way of getting them paid off.
So, do hospitals provide school loan forgiveness assistance? Yes. There are different ways to work it. Do they do it very often? No, especially dependent. Hopefully, that’s a little rundown of how it works.
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Are Physicians Eligible for Student Loan Forgiveness?
Are doctors eligible for student loan forgiveness programs? In my mind, there are three main ways that a physician can have their loan forgiven. Or at least a portion of their student loan forgiven. The first would be if the employer simply agrees to pay a certain amount directly to the physician’s loan provider. The second would be if they’re part of loan forgiveness programs. Which is where they work for a federal entity for a period, generally out of training. And then third would be if there’s a state program.
Not every state provides a loan forgiveness program, but many states do. Normally, it would be in rural areas that are hard to recruit to. And the state would then pay or forgive a certain amount of whatever their loan was. If the physician stays in the area practicing their specialty for a set amount of time.
Hospital Network Service Loan Forgiveness Programs
Let’s just take each one individually and go through some of the things you need to think about. First, it would be with the hospital or hospital network. You are very rarely going to see any kind of debt forgiveness if you are joining a private physician-owned practice. It just simply does not happen. If you do enter debt forgiveness with a hospital or hospital network, it’s usually situated like this: they’ll say, we will pay this amount to your loan provider directly.
Then as long as you stay employed with us, there’s no student loan repayment. And there are a couple of ways to situate it. The first would be if they just give a lump sum upfront. On average, the debt forgiveness would be somewhere between 50,000 to 150,000. Then if they give a lump sum upfront. It would be forgiven over time. This means if they give you $150,000 for debt forgiveness, and then you leave after six months, you’re going to have to pay back a large portion of it.
It’s usually tied to the term of the agreement, sometimes beyond it if it’s a significant amount of money. Let’s say you have a three-year initial term, then they would state maybe for every month that you’re there 1/36 of the debt that the upfront money we gave you would be forgiven.
That’s a normal way of doing it. Another would be, let’s just say it’s $50,000 stretched out over the term and it’ll just state every month, we’ll pay directly whatever the 1/36 of 50,000 is to your loan provider. That’s good in the fact that a physician wouldn’t ever have to repay anything which is annoying. And there are some tax implications as well. So, those are kind of the two main ways of doing it.
School Loan Forgiveness in a Big Hospital Network Setting
If you’re with a hospital network, they’ll just pay you a significant sum of money upfront, then you use that to pay off a portion of your debt, or they’ll just pay a certain set amount over time. Sometimes, if let’s just say they were going to pay you 150,000, they may do 50,000 at the end of each year of the initial term of the contract. So, after year one, they’d pay 50,000 to the loan provider after year two. That’s another way of avoiding having to pay anything back. And I would suggest doing it that way.
Public Service Loan Forgiveness
The next one would be with the public service loan forgiveness program. Briefly, this is if you become employed through the federal government and then stay employed for ten years is the amount then they will completely forgive your student debt.
The downside to that is you’re usually going to make less, so your compensation is going to be below market. So, you may need to do a cost analysis of, alright, well, if I’m making $50,000 less a year over the course of 10 years, could I have just taken a normal position, made more, and then paid it off in the end? Depends upon the situation, but that’s kind of the thinking that you need to go through is alright, which one ultimately would I make more money or have the forgiven faster?
And then last, as I said before if there’s a state program. Some states will provide, once again, usually somewhere between 50,000 to 150,000. And they would just state that if the physician was working within a certain area for a period, they would have whatever set amount forgiven.
Private Physician Loan Repayment Program
Debt forgiveness is rarely provided. It’s not a common thing. And as I said before, if you’re joining a private physician-owned group, it’s exceedingly rare that you would get any kind of debt forgiveness at all. Obviously, it’s a great perk to a job. I know plenty of doctors that I assist will then seek out those jobs in the first couple of years, get through the initial three-year term, get their student loan forgiven, and then move on to whatever city that they ultimately want to end up in. That’s a smart way of doing it.
So yes, doctors are eligible for debt forgiveness. It generally will not be the entire sum. It will be a decent portion of it. But if you kind of look for those specific jobs, you certainly can find opportunities for that.
Physician Recruitment Forgivable Loan Explained
Physician recruitment agreement forgivable loans explained. Primarily, hospitals use these for people just coming out of training. How a recruitment agreement works is the doctors would have employment agreements with a private practice within an area. Then, the hospital would supplement the first-year compensation of the doctors if they stay within the area for some time. I know it might be a little complicated, so let’s break it down. The employment contract with the employer will dictate the employment relationship between the parties.
What are “Physician Recruitment Agreements?”
Some practices couldn’t afford to compensate a physician at the very beginning completely. And so, the hospital may need that specialty in the area, but they don’t want to employ that physician themselves. They might say, if you bring in this physician in this specialty, we’ll cover their first-year expenses plus some bonuses. In the recruitment agreement, it may state, “We’re going to give you a signing bonus. We’ll be helping with relocation assistance, and then cover a certain amount of compensation for the entire first year.” Let’s say you’ve got a primary care physician, and they’re making 200,000 a year. The hospital would say, alright, we’re going to supplement 200,000 for that first year.
And then they’ll offset that by whatever the doctors bring in. They’ll cover the practice’s expenses as well. And then at the end of that year, there will be an outstanding amount of money.
How Physician Loan Works
That amount is going to be thought of as a forgivable student loan. And as long as the doctors stay within that geographic area of the hospital. The recruiting agreement will say, as long as you stay within these zip codes, we’ll continue to forgive the student loan. There’ll usually be a one-year income guarantee period for compensation, and then there’ll be a forgiveness period after the fact. Usually, it’s three to four years.
How they usually would do it is they’ll take that amount. In this scenario, the total amount with signing bonuses, relocation assistance, base salary, and practice expenses is 300,000. And it’s a three-year forgiveness period. They’ll say, alright, for every month you’re here, we’ll forgive 1/36 of that 300,000. If you stay in the area practicing for three years, we’ll forgive that amount at the end of that period. You do not owe us anything. Then you’re free to move on and do what you want.
Why Would Doctors Sign a Physician Recruitment Agreement?
Now, why would doctors sign a physician’s recruitment agreement? Well, during recruitment, I would avoid it if possible. But there are some jobs that would only exist if supplemented in some way by the hospital network. And so, you need to say, is the practice just doing this not to have to pay me? And I will not tell the practice that they’re doing something dumb. They’re not, they’re being smart about the business. Why wouldn’t they accept supplements? Why would they say no, we’ll pay everything, when they could have a hospital cover many of the fees.
The Downside to Physicians in Signing Physician Loan Agreements?
The downside to the doctors is several things. One, they will ultimately be responsible for the outstanding amount at the end of the initial income guarantee period. And let’s have a scenario where they have a non-compete in their contract with the employer. Still, the recruitment agreement states they must stay within a geographic region to forgive the outstanding amount. They could be completely limited in their options if they have a terrible non-compete in the employment agreement.
Ideally, the hospital would require the employer to remove any non-compete language. I’d suggest making sure that happens. And you need to press the hospital network to press the employer to remove that language. If you go to the employer and say, I’d like that removed, they may say, no, we’re not doing that. If the hospital insists that the employer remove that type of language, you need to tell the hospital. Therefore this needs to happen. They will much more likely remove them if the practice requires a physician. Still, they don’t want to pay the entire amount of compensation and bonuses at the beginning. It’s likely worth it for them to remove the non-compete to get supplemented with all the things I just mentioned.
If you have a physician recruitment forgivable loan, you get the non-compete removed from the physician’s employment contract. Because if you’re in a rural environment, there aren’t that many opportunities in your specialty. And you did have a non-compete, maybe there are no opportunities for you. It would be impossible for you to work out that three-year forgiveness period. You’re stuck with a significant amount of money.
There is interest in that amount as well. They’ll likely have you pay it back immediately and fully as soon as you’re no longer practicing within that region. So, that’s something doctors must be cautious about. And then another one is, every work looks great at the beginning, right? Everyone is nice, a huge growth opportunity, but it may not be as nice when you get there.
Other Issues to Think About
There may be problems that there’s just no way of knowing about in the interview process. You may come into a job and think, oh man, this isn’t gonna work for me. If you’re under a recruitment agreement, it could cause big problems for you. One, getting out of that work or two, paying back significant amounts of money. I would be cautious about signing a recruitment agreement with a hospital network without really thinking about it. Is this the absolute place that I want to be? Do I have other opportunities elsewhere that won’t require me to sign a recruitment agreement? It’s an arduous process. When I’m going over physician’s contract agreements with someone who just had training, they generally don’t know about these things.
When adding a recruitment agreement on top of an employment agreement, it’s like information overload for doctors. Sometimes, it’s difficult to convey the dangers of signing something like that. It’s probably infrequent. The contract agreements that I review containing or having a recruitment agreement attached is perhaps less than 10%. I’m not saying this is a terrible opportunity. As I said, some jobs may not exist if the hospital doesn’t supplement them for the first year. And they can become tremendous opportunities.
But you always must look at, alright, what’s the worst-case scenario in this situation? The worst-case scenario is someone signs a contract, starts work, hates it, gets out, and owes 200,000. I can tell you if you’re just out of training, you’re not going to have, at least not immediately. So, that’s a breakdown of a physician forgivable loan. I would suggest talking to somebody, an attorney, about each document before you sign anything. Especially Physician Loan Agreements or Physician Recruiting Agreements. Honestly, be careful if you’re going to do both and find somebody with expertise in doing this. To get a set of eyes on it and kind of walk you through the dangers of it.
What is a Stark Service Area?
What is the stark service area definition? The definition is so that a physician can better understand the repercussions of signing a recruitment agreement. And whether they’re eligible to sign one as well. First, most recruitment agreements I find are for newer doctors. Either they’re just coming out of training or have been out for a year. The basis of the recruitment agreement. And lastly, the exception allows a hospital to supplement the medical practice with money to bring in the physician. I’ll just read what those are.
Relocating to the Patient Origin
There must be a documented need in the zip code area for the physician specialty. It must be in writing.
The physician must relocate their medical practice to the patient area. What is the area itself? It must be the geographic region that the hospital serves. In this case. It is the lowest number of contiguous zip codes from which the hospital draws at least 75% of its patients.
That means in the recruitment agreement. There will be an attachment. It will just have a bunch of zip codes. And depending upon where it’s at, it could be 40 different zip codes. In some bigger cities, it could just be a couple. What those zip codes mean is that the physician has to relocate their practice within those zip codes. Then they have to provide care to the people within them.
And that grants the exception of how a hospital can supplement the medical practice that the physician is joining. How do they supplement? Well, it’s generally through an income guarantee. The hospital will guarantee that the physician will receive a certain amount each month. They can reimburse overhead expenses, signing bonuses, relocation expenses, and student loan assistance.
If the Physician Leaves the Medical Practice Within the Service Area
There are several ways to supplement a medical practice. But the service area and medical practice must be within those zip codes. I guess the main thing to consider is that suppose the physician decides to leave the medical practice. They can continue to stay within that stark service area and not have to pay anything back to the hospital. How the recruitment agreement works is they will provide a certain amount of money. And it’s generally the first year, the income guarantee period.
Then, as long as the physician stays within that service area for several years, it’s three or four years. Which is called the forgiveness period. If you stay within that community for that period, the employer will forgive what the hospital paid in year one. Usually, it’s a monthly fraction. So the hospital would forgive 1/36 of that student loan monthly if it’s a three-year forgiveness period. Suppose the relationship goes south with the employer within those contiguous zip codes that serve 75% of the patients.
Now, there are two exceptions. There are some exceptions for rural areas. And to residents who’ve been training within the area where this may not necessarily apply. They don’t have to move into the area, but I won’t get into that right now. If the physician wants to end the agreement and stay within the area, they don’t have to pay anything back.
Stark Service Area Considerations When Staying
There must be an analysis of a few things before a physician signs a recruitment and employment agreement simultaneously. One, there shouldn’t be a non-compete. Most recruitment agreements will list that there can’t be a non-compete between the employer and the physician. Let’s say there’s a broad non-compete. 30 miles from the primary practice location and all the zip codes are obviously within 30 miles of the hospital. The physician won’t have the opportunity to stay within the area. That’ll force them out. And they may be on the hook for having to pay back the amount that’s still left on the student loan. First, the physician needs to make sure that there’s no non-compete. Or maybe a very reasonable and small non-compete where they’d have other opportunities.
Another analysis we must do is, are there other opportunities in that area if the physician were to leave? In smaller communities and certain specialties, only one practice does that. So, if a physician wants to stay in that service area, is there another practice to go to? Do they have alternatives? The worst possible thing that can happen to a physician is when something happens with the original employer. They don’t have an opportunity to get work within the service area. Then they owe hundreds of thousands of dollars to the hospital.
There should be joint and several liabilities between the medical practice and the physician. That’s another thing to also look at. Hopefully, that’s a good analysis of this stark service area. These are tricky. If the recruitment agreement is the sole reason why work is available, certainly it’s an excellent opportunity. But these do not always end well. And they present some real challenges if the relationship goes south with the employer, so we need to be careful.
What is the Stark Law Recruitment Exception?
Today, I will discuss recruitment agreements; the interplay between the employment agreement the physician will sign as a new job. What a recruitment agreement is, and the downsides and upsides.
What is a recruitment agreement? The stark and anti-kickback laws allow a hospital to provide certain financial incentives to medical practice in their efforts to bring in a new physician into the area. What does that mean? If a physician is moving to a new job, either out of training or from somewhere else. Most of the time it’s with young doctors or people newly out of training. They will sign an employment agreement with the practice itself.
However, there are also some opportunities for a hospital to supplement that physician’s income for the first year. And provide some other incentives too. So, you could have a recruitment agreement with an income guarantee. They will essentially pay the medical practice a certain amount to supplement the physician’s salary. They can provide moving expenses, signing bonuses, and student loan repayment. Or they could also cover costs from the practice associated with bringing the physician in, most likely through overhead. There are a lot of opportunities for a hospital to supplement a medical practice. Why do they do this? Well, it’s possible that medical practice could not financially afford to bring in a physician without these supplements. Or it’s also just a smart way for a practice not to pay as much money as they usually would.
In most of the specialty services, it would be someone who must build up a practice. Most doctors moving into a new job are not very profitable for the first year or two. Once again, kind of specialty-dependent and practice-dependent. Are they replacing somebody? Are they coming in from the cold? Do they have any ties to the community? All those things kind of factor in. It usually takes 12 to 18 months for practice to reach maturity. If you’re in family care and joining a practice, you’d continue seeing more volume for the first 12-18 months.
Rules of What Hospitals Can Do
What are the rules that dictate what a hospital can do? The conditions that need to be there? I’m just going to go through the list.
One, there must be a documented need in the area for the physician specialty. It needs to be in writing. The hospital will give a contract to the physician and the qualified health center, and they will both sign it. The physician must relocate their medical practice to the area. They must move into the geographic area served by the hospital. What is the geographic area? Mostly, it’s the lowest number of contiguous zip codes from which the hospital draws at least 75% of its patients. So, there will be an attachment at the back of every recruitment agreement that lists zip codes. Basically, the physician must serve those zip codes. For the recruitment agreement, the physician must move at least 25 miles from 25 miles into the geographic area.
There are also some exceptions for rural communities and residents who’ve been in training and want to stay in the area. A few minor exceptions exist. But for the most part, the things I mentioned dictate whether a hospital can provide the recruitment agreement. What does the recruitment agreement look like? It’s a contract like an employment contract and dictates the terms of what they offer. And most importantly, what the forgiveness period is. The hospital does this so they can bring in specialty health services.
Down the road, I guess initially, they will get downstream revenue from referrals from this physician. I mean, that’s the whole point of bringing them in. Even though they provide an income guarantee, a signing bonus, and overhead expenses for the first year, which is standard.
Forgiveness Period for the Health Physician
Well, they will require a forgiveness period, meaning the physician must stay in the area for several years. It’s usually three, sometimes four. Then each month they’re in that area providing care, the hospital will deduct a fraction from the overall loan amount. Let’s say a hospital sends 200,000 to the medical practice. That 200,000 amount, after the first income guarantee period, which is usually one year, will then be three-month forgiveness. So, the hospital will forgive 1/36 of that 200,000 every month. And this means that no one must pay it back if the physician stays for the forgiveness period. In this case, if it was three years, no one would owe any money back to the hospital.
The hospital, as I said, will hopefully gain more by having that physician in the community and utilizing the downstream revenue from recruiting referrals into the network, which should more than cover whatever they paid out to bring the physician into the community.
The downside to the physician. Depending upon the agreement’s language, if they leave the area, they’re responsible for that amount of money. Usually, it would be a joint responsibility between the practice and the physician. But for the most part, if the physician leaves early, they will have to pay back that money.
For some doctors and other health specialties, it can be a significant amount of money. I’ve seen up to 500,000 after the first year, not that it’s specialty-dependent. But it could be a lot of money. Let’s say the relationship goes sour with whoever the employer is. Maybe there aren’t opportunities in the area to switch to a new group and continue in the geographic region. It can be a big problem.
The benefits of a recruitment agreement. One, if the work couldn’t exist, the medical practice couldn’t afford to bring in a new physician into the area. Then clearly, the recruitment agreement is creating the work opportunity for the physician. So, it may be necessary. I mean, it’s a no-brainer for medical practice. They essentially can have an entire year of doctors’ salaries supplemented by a hospital. They would take advantage of that if they could, and some practices are savvier than others.
Some of those agreements will require that, and they should, there’ll be no non-compete. If the physician must stay within a certain area to not violate the agreement. And the contract is terminated with the original employer. Still, there’s a non-compete that forces them out of that area, well, that is a massive problem for the physician. Most recruitment agreements will prohibit the employer from placing a non-compete into the agreement. That’s one thing to look for.
So, that was a little breakdown of recruitment agreements, stark law, and anti-kickback statute. It could be a valuable tool for a physician. But it could also be a disaster if not worded properly. Or if the employer has thought of all the permutations if the physician leaves the practice.
When Should a Resident Receive a Signing Bonus?
When should a physician in residency receive a signing bonus? The timing of it is essential. When medical residents finish training, they have likely already signed an employment contract. More importantly, when negotiating the contract, usually in their early PGY-3 year, some PGY-2. When they receive the signing bonus is crucial for a couple of factors. One, as doctors in residency, don’t make much money. Say they’re training in New York and get a job in California. Depending on their family size, it could be a substantial amount of money to move across the country.
Now, almost every employer someone signs with as a resident will offer relocation assistance. Usually, between $5,000 to $15,000. You won’t see above $15,000 as far as relocation assistance goes. Somewhere along there, they should pay for the entire amount, to be honest. And some people moving a short distance can also use the relocation assistance money for traveling back to the city. To look for an apartment or a home. So, airline lodging, all that kind of stuff. Some people could use that money for a security deposit or maybe the first couple of months’ rent. Most employers are flexible in what the physician in residency can use that money for. But they want it to be housing-related or relocation-related in some manner.
Negotiate To Get The Amount of the Signing Bonus You Need
Now, the timing of when you get paid is important. Usually, the physician in residency will receive different offer bonuses. One would be the relocation assistance as I said before, somewhere between 5,000 to 15,000. And also, a signing bonus is usually paid out during their first pay period. Whenever they get paid first after they start with the employer, that’s when they would receive the bonus. There’s a different way of doing it. Often employers will say unless it’s a big hospital network that has established relationships with moving companies. Let’s say you’re running a private practice. They’ll say, pay your moving expenses, submit us the receipts, and then we’ll reimburse you. Well, for some people, outlying $10,000 to $15,000 to move is difficult. Simply because, as I said before, you’re not a wealthy doctor when you’re still in training.
So, we assess the situation for the physician in residency and determine if is it helpful if you get this prior to moving. How soon before you complete training do you need the money? We can say to the employer, “Hey, look. It will help us defray the cost of the move if we receive this before moving.” Or, more importantly, maybe the employer would be willing to pay the amount directly to the moving company. In that way, there’s no cash outlay by the physician, which is the entire point of that. The signing bonus also. The timing of when the employer pays it can be essential as well. Depending upon the size of the signing bonus, we could say, we would like half upon execution of the agreement.
Discuss Resident Physician Repayment Obligations
So, when you sign the actual agreement, and both parties sign it, that’s called the execution of the contract. Many times, we could say, we’ll get half upon signing. And then the other half when they start. Both bonuses will have a repayment obligation tied to them. At least it usually would. This means that, let’s say the physician has an initial two-year term. The employer states, you’ll owe us a prorated portion of the bonuses if you leave before the initial two-year term. It could be quarterly forgiveness, monthly forgiveness, or yearly forgiveness. Let’s say someone has a $30,000 signing bonus. They say, alright, half of it is forgiven after the first year. And the other half is forgiven after the second year.
So, if the physician left between the first and second year, they owe back $15,000. So, the employer is insulated from the physician, simply taking the bonuses early. And then, splitting out on the job by signing the agreement in advance. There’ll be language in there that talks about the repayment obligations. If the employer is expressing concerns about that. Or maybe they just don’t utilize that. That would be a good way of saying, look, if you’re concerned about me, just take the money, and leave.
Then let’s put in these repayment obligations and therefore, you’re protected if I were to leave. And I benefit by getting the money in advance. So, that’s a discussion of when the physician in residency should receive the signing bonus or relocation assistance. It’s just dependent upon the situation for some people. It’s fine receiving it after the fact. But for others, it’s important to have it up front—just some things to think about.
How Much are Resident Physician Salaries?
One question med students have is the average salary for a resident physician. After a physician graduates from medical school, they move on to an internship or residency within their specialty. Then earn. But for most of them, it’s simply not even remotely enough for the work that they’re doing. So, it’s not uncommon for residents to work 70- or 80-hour weeks. The average salary for residents in the United States is around $63,000. Maybe you’re a resident right now, thinking, I don’t even make close to that, or maybe I make more. This is average across all specialties. Some specialties will make a little bit more than others.
Leverage in Salary Negotiation
Some could be as high as the 60s. Whereas maybe in family medicine, you could be about 50s. Can residents negotiate their salary during training? No, they have no leverage. Anytime you’re negotiating a contract, you base it upon leverage. Even those residents coming out of training and moving on to their first employed job don’t have much leverage either. The only leverage they have in those situations is if they’re in a needed medical specialty. Or two, if they’re willing to go to an underserved geographic area and need doctors.
So, around 63,000 is the medical residency salary. If you think of it this way, if they work 70 to 80 hours a week, they’re making about $15 hourly. And providing care as a doctor for $15 an hour. Now, once they move out of training, the salary increases substantially. And for some specialties could be an eight-fold increase, at least just coming out. But that’s what it is. One consideration we make when reviewing and negotiating the resident’s or fellow’s first contract. Most of them don’t have a ton of money coming out of training.
Importance of Relocation Assistance
So, suppose the new employer is offering a signing bonus or relocation assistance. In that case, we want to ensure they’re getting a chunk of that before moving and starting the new job. Wherever, if they are moving from where they’re currently training. Simply most residents, especially if they have family, may be the only breadwinner. At that point, they don’t have $10,000 to $15,000 if they’re making a cross-country move. So, we need to ensure that either the employers pay their moving costs directly to the moving company. Or they’re going to front the money before the physician needs to spend it on the move.
In that way, they don’t have to outlay a ton of cash. Because it certainly is expensive moving from one place to an entirely different one. Medical residents certainly are underpaid. Unfortunately, it’s part of the process they must go through to be fairly compensated for the services they provide. But it’s just tough when you’re making that little. And I think the average physician has about. I think 47% of doctors have student loans over $200,000. It could be a big burden.
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