Starting residency means signing your first hospital contract, and it’s likely far more money than you’ve ever made before. But before signing, there are a few factors to consider.
Here’s the financial fine print—from potential red flags to noteworthy benefits—you won’t want to miss.
Factor #1: Understanding Your Pay
Every two weeks or so, you can expect a paycheck to hit your account, but understanding your pay goes far beyond that.
Doctors can have several tiers of payment, something new residents may not learn in school. Your hospital system may offer financial incentives for working night shifts, or you could make more based on your productivity—the procedures you perform, patients you see, etc.
As a new resident, start by evaluating your base salary. Is that amount guaranteed for a set amount of time, or can you expect it to fluctuate?
From there, you can look at additional incentives, like the ones we mentioned above. Are they available to you right away, or are they only offered based on seniority? The availability and regularity of these incentives may impact your paycheck, so asking questions upfront is critical.
Finally, you’ll want to get a good idea of how your employer plans on measuring your performance. Will these evaluations impact your pay, either positively or negatively? Be sure to ask about future growth within your hospital or network. While you may be satisfied with your pay and position now, it’s good to know what you should be working towards.
Factor #2: Considering “Total” Compensation
Your salary is only one piece of the puzzle for a doctor’s compensation. Today, benefits packages can include various offerings, from retirement accounts to insurance coverage.
It’s common for employers to offer a retirement plan, like a 401(k), 403(b), or 457(b). Contributing pre-tax dollars to these accounts not only lowers your taxable income for the year but serves as the foundation for your retirement savings strategy.
If possible, consider maxing out your employer-sponsored account. The 2022 contribution limit for a 401(k) is $20,500. With time and compounding interest, maxing out your 401(k) contributions could yield a substantial amount of savings by the time you reach retirement.
Not to mention, many healthcare employers offer 401(k) matching, meaning they’ll match a percentage of your contributions. If your employer offers a match, not making the maximum matching contribution would leave money on the table.
Insurance is another important component of your compensation package. Find out what your employer covers and what you’re responsible for paying, including health, long- or short-term disability, life, and malpractice insurance. If you eventually choose to specialize, additional insurance may be necessary to completely protect your income.
Additional compensation offerings to consider could include:
- Annual or quarterly bonuses
- Parental leave
- Continuing education
- License and membership fees
Factor #3: Catching Potential Snags
Before signing a contract, comb through it for potential red flags or “snags.”
If you’re promised specific bonuses or incentives, get them in writing and read the terms. A signing bonus or relocation fee may be alluring, but are there strings attached? Some hospitals require you to pay these back if you leave before a set period.
You may have recruiters promise other incentives during the process, but getting them in a signed contract is the only way you can guarantee you’ll have access to those things. If it’s not in writing, the hospital can’t be held responsible for upholding the agreement.
It’s common for employers to include a noncompete clause in their work contracts. Some non-competes bar you from working at other systems in the area for a set amount of time after your current contract ends. If this is the case, are you prepared to relocate if this opportunity doesn’t work out? These clauses can be hard to work around when finding a new job, so you’ll want to have a solid grasp on their potential ramifications before signing on the dotted line.
Factor #4: Negotiating with Confidence
Negotiating is intimidating, but it’s a normal and expected part of establishing any work contract. Go into the negotiation knowing what’s important to you, what’s okay to sacrifice, and what you’re willing to discuss further.
Be appreciative of what the hospital offers you, but be candid and honest about what you’re looking to get out of this employment. Being respectful and willing to have an open conversation is key to getting the most out of your work contract.
Factor #5: Working with a Professional
A contract attorney can help read through the fine print of your work contract so you know exactly what you’re signing. They can alert you to any red flags you may not have noticed otherwise and help you feel confident in your decision to sign.
The team at Partners in Financial Planning works regularly with attorneys, and we’d be happy to put you in contact with someone well-versed in contract reviews and negotiations.
Let’s Talk Money
We strive to build a solid financial foundation for doctors and medical professionals at any stage of their careers. As you move through residency and beyond, we’re here to help get your financial health in order.
Feel free to schedule a time to talk; we can help establish your financial priorities, review offers of employment, and more.
Partners in Financial Planning provides tax-focused, comprehensive, fee-only financial planning and investment management services. With locations in Salem, Virginia and Charleston, South Carolina, our team is well-equipped to serve clients both locally and nationally with over 100 years of combined experience and knowledge in financial services.
To learn more, visit https://partnersinfinancialplanning.com