When Should a Resident Receive a Signing Bonus? | Residency Bonuses
When should a medical resident 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 physicians 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 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 Signing Bonus You Need
Now, the timing of when you get paid is important. Usually, the physician 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 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.
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How Much are Resident Physician Salaries?
One question med students have is the average salary for a resident physician. After physician graduates from medical school, they move on to an internship or residency within their specialty. Then get paid. 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.
Some could be as high as the 60s. Whereas maybe in family medicine, you could be about 50s. Can a resident 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. They only have leverage in those situations if they’re in a needed specialty. Or two, if they’re willing to go to an under-served geographic area and need physicians.
So, around 63,000 is the medical resident 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 or fellow’s first contract. Most of them don’t have much money coming out of training.
Importance of Relocation Assistance Signing Bonus
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, maybe 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 physicians have student loans over $200,000. It could be a big burden.
When Should a Physician Resident Start Looking for a Job?
When should a resident physician start looking for a job? This is a complicated question. First, I do contract reviews daily for physicians. Many are individuals getting their first jobs who’ve never had an employment contract before. They’re either in their last year of residency or fellowship and have an offer they want me to review. There are occasions where there’s a multiple-year fellowship, maybe a PGY-2 or something like that. Wherein residents already have an offer that won’t begin for two years and want me to look at, as well.
Search for a Residency Job
Let me give some words of wisdom, just from doing this for a couple of decades now. One, if you are a resident or a fellow. You know where you need to be geographically. Maybe you have to move home, or you have a significant other completing trading themselves elsewhere. Want to move close to your family, whatever it is. If you have a pinpoint location in mind, getting started sooner than later is probably a good idea. Start looking for a job when you still have two years left in training. Think of it from an employer’s perspective. Some employers don’t have immediate needs for a physician, right? So, if they are well run, they’ll have financial forecasts.
Forecasts as far as the patient load will be, perhaps the practice is expanding and opening a new office. But they’re not going to open it for a year. I guess I’m saying that employers know that they’d have a need for a physician. But sometimes, it’s not for a couple of years. That’s why an employer will start looking immediately for a position that’s not immediately available. Once they get out there and see some candidates, even if that candidate has two years left in training. It’s not uncommon for them to offer them a position and make them sign an employment contract. One benefit of looking early is simply getting in before someone else takes the part. So the earlier you look at the job, the more likely you’d have a chance to get it. If that makes sense.
If You Take a Practice Early
Next, the downsides of going early. What’s the negative part of finding a position far out from when residents have completed training? Suppose you sign an employment agreement that doesn’t commence for two years. And then you have some change in the family. Maybe the significant other that was supposed to move to one city is now moving to another. Or there’s a sickness in the family. There are a million reasons why a location is perfect at one point, and two years later, it’s not. The downside of signing early is that things may change in your life, but you have signed the employment agreement. Then it gets into: how can I terminate this agreement even before I’ve started? Are there any penalties associated with it? Some contracts have built in that if the physician doesn’t start, they will owe some penalty.
Which Year to Start the Job Search?
I would suggest. Before signing an agreement with that kind of language, probably get it reviewed by someone to go over the ramifications. What happens if I sign the agreement, I either can’t start or don’t want to start. And then need to get out of the contract? Another possibility is you sign early, and then you get a better offer. So maybe it’s just a better opportunity for you. The compensation is more. The benefits are better. The concern is that if you sign a contractor early, you’re foregoing any potential opportunities down the road. Now, some employers are okay with letting someone out with enough notice.
The contract will have a notice requirement, but if you haven’t even started, most employers are understanding. If there is some actual change in family circumstances. They’re not as forgiving if it’s just simply, this person is paying me more than you. I don’t want to complete the terms of this agreement. Once the contract is signed, the employer relies upon you to start, so they will stop recruiting anyone else. They’re going to make plans to either bring in more patient volume. Or maybe the office they’re opening up is contingent upon you being there.
Where Residents Should be Looking
So, I guess there are problems for both sides if the physician doesn’t want to start. The employer could have some damages associated with the physician not completing the terms of the agreement. Overall, I’d say the sooner, the better to start looking. However, taking the first offer and signing an employment agreement without comparing different bids is a bad idea. There are almost always multiple opportunities for somebody. Just to accept the first one just because they are the first doesn’t make a lot of sense to me. So I’d suggest you look at multiple offers, gauge the compensation structure amongst them, and then go from there.
Will I Be Paid My Bonus if I Terminate the Physician Contract Early?
The first question is, what type of bonus is the physician thinking about? Like bonuses when you sign the contract, productivity bonuses are involved once the contract is ongoing. Let’s take the signing bonus first. Almost any physician will receive a signing bonus and relocation assistance when signing an employment agreement. Let’s say there’s a $20,000 signing bonus, and then the employer will provide up to $10,000 for relocation. Normally, there would be language that states if the physician leaves before the initial term ends.
The initial term is just how long the contract lasts. Let’s say it’s a two-year term. Normally, there would be language that states that if they leave early, they must pay back a prorated portion of that amount. Monthly is probably the most standard way of doing it. Let’s say the physician lasted a year, and then they have one year left on that two-year term, then they’d owe back half of whatever the bonus was. So, they’d have to pay back 15,000 in total. 5,000 for the relocation assistance, and 10,000 for the $20,000 signing bonus. It can be quarterly. Some places do it yearly. From the doctor’s perspective, the shorter forgiveness period and the shorter interval are more advantageous. If you stay for 11 months, then leave, and it was yearly forgiveness, well, you’re out of luck.
What Are the Productivity Bonuses of Physicians?
You just missed out on that whole year of forgiveness. Whereas if it’s monthly, no matter where you leave, it’s about as up-to-date as it can be. So, that’s one way of not getting your bonus. If you leave early, you have to pay a portion of that back. Now, the other bonuses are productivity bonuses that a physician would receive. There are different types of productivity bonuses, and there are different types of compensation models. The two most common productivity models are net-collections for private practice and RVU-based compensation, used mainly by hospital networks. Let’s say a physician had a contract for RVUs, and it said, any RVU generated over 6,000 in a year, you’ll make $45 per RVU, but it’s a yearly bonus.
There’ll be language that states the physician has to be employed when the bonus is paid. So, there’s a possibility that there might be a window where the physician earned the bonus towards the end of the year they give notice. Then the contract is terminated before they receive the bonus and out of luck. The physician wants to ensure there’s a language that essentially states the bonuses. If they earn a bonus, they will receive the bonus no matter whether the contract is terminated early or in some way. It would help if you really thought about that. If it’s net-collections, usually, that would be a hybrid where there would be a base salary. Then the physician would get a percentage of what the practice collects. Let’s say a physician has a $240,000 base.
The Benefit of Getting a Paid Bonus Earlier
One normal way of doing it would be the practice states, alright, after you’ve collected $20,000 monthly, which covers your base salary. You would get a percentage of net-collections after that. In that scenario, a normal percentage will be somewhere between 15 to 25%. And then it would state to pay within this many days of the end of the month, or perhaps it’s quarterly. It’s rare for it to be annual. But if it is, you want to make certain.
Once again, just like with the other bonuses, the shorter period where you get paid protects you if you leave early. If you have a yearly bonus, as I said, and then you leave in month 10, even if you earn that bonus, if there’s no language there, you’re not going to get it. So, you want to tighten that interval. Preferably, it would be a monthly payout. You’d set the interval or whatever the level is where you’ll get paid so that you receive a monthly payment.
And that way, you insulate yourself from amassing a bonus but not getting it. So, those are the two main productivity ways. The RVUS, and net collection. And in the agreement, it’s going to have a termination section, and this will state what happens in the event either party terminates the agreement.
What Happens to Payment Upon Termination?
And normally, there’ll be a section at the end of the termination section that states what happens to payment upon termination. You need to pay attention to that language. It will most of the time dictate if/when and how the physician will receive those bonuses. As I stated before, their timing is whether they get it at all, even if it’s earned but not paid out before they leave.
It would help if you gave specific attention to that section. I find some places try to kind of screw the doctor out of the money. This is because the doctor doesn’t understand the timing of the payment or how to earn the bonus. So, it’s something to think about. I mean, it feels bad to work hard, earn a bonus, and then, due to timing, not actually receive it.
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