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Grand Rounds-How to Evaluate a Neurosurgery Practice Opportunity

Judy Rosman

December 19, 2011

Transcript

- Hello, ladies and gentlemen, and thank you for joining us for another session of the Grand Rounds. The discussion today has been kindly offered to us by Judy Rosman from RosmanSearch. She'll be talking to us about ways to evaluate a new neurosurgery practice opportunity. Thank you for joining us.

- Aaron, thank you very much. Hi there, my name is Judy Rosman and I am so happy to be able to speak with you about my experience in how to evaluate a neurosurgery practice opportunity. Any discussion about how to evaluate a neurosurgery practice opportunity has to begin with your priorities. Being happy with the location that you're in is critically important. You can't change the location of your practice although the practice itself is dynamic and can change over time. However, if you can't develop a sufficient surgical volume, even if you love the location, you're going to wind up leaving. If you can't get along with the people with whom you're working, you're also likely to wind up looking for a new job. And although people are very concerned about money and we're definitely going to talk a lot about compensation today. I will say that in all of my years of doing neurosurgical recruiting, I've never had a call from somebody who says, I really love the people I'm working with. I love what I'm living and I have exactly the right practice and I'm just not making enough money. So you have to find me a new job. I really think that if you are happy with your practice, happy with the people and happy with the location, you're very likely to make enough money that you're going to stay long-term where you are. I'd like to start by addressing some of the biggest mistakes that we see people make. The first one is focusing on geography so much that you forget that you really do need a good job. What happens is you might get very fixated on being in a particular place. And as a result, you choose from the best jobs that are available in that location. Every year, my firm hears from people who really wanna be in Miami Beach or really wanna be in Southern California, or really wanna be in even a particular place in the middle of Michigan that they find attractive or maybe where they have family. And that's very important, but sometimes there isn't a good job in that place and a lot of times people wind up relocating as a result. Another mistake that people make is thinking that they can contract with somebody that they trust with somebody that they don't trust and protect themselves by having an ironclad contract a long time ago, I was a lawyer I'm not a lawyer now I've recovered, but I had a contracts professor who once said something very important to me. He said, if you have the right people on both sides of the deal, you're not going to have any problems. But if you have an ill intended person on either side of the deal, you're going to have problems, no matter what the contract says, a lot of times people are very tempted to take a contract with somebody that they don't trust unnecessarily or with a job that they consider risky. And they think that they're going to make up for that risk by getting large contractual guarantees, I'll encourage you not to do that. It really never works out well. I want you to think about contractual protections this way. A lot of times people think that they have a contract for three years or five years for guaranteed income. And then they look and they see that their contract has an out clause of 30 days or 90 days or 120 days. And when you have an out clause in your contract like that, really you don't have a three-year or five-year contract. What you really have is a contract that is continuously renewable for a 30 day or 90 day or 120 day period. So if somebody does not live up to their contractual obligations, really what you're going to be left with is the opportunity to pursue whatever contractual remedies are provided to you or to sue your employer, which is usually the fastest way to make yourself unemployable. Another common mistake that people make is ignoring difficult politics. Usually people do this in order to take a job that is exceptionally lucrative or is just the only job in the location where they wanna be. Normally it's all about the money and the most common conflict that we see is hospitals get into disputes with their local neurosurgeons, mostly over pay-for-call, but sometimes there are other disputes sometimes there is a very, very significant ortho spine presence. And the hospital would like to bring in a neurosurgeon who they need for call coverage, for example. And that neurosurgeon is really not going to be able to develop a successful practice. And the ortho spine people are going to try very hard to run the neurosurgeon out of town if they tried to develop such a practice, a lot of times the hospitals, because they want the call coverage so badly, they will make a lot of promises about how everything is friendly and when you show up, it might not be as friendly as you think it is. So I'll encourage you not to ignore difficult politics, but actually to speak with the local practitioners, including those who you think might be your competition in order to find out the whole story. Another common mistake that people make is signing up for an income guarantee that is not sustainable. Again, this can be attractive to people who are in a lot of debt who really wanna be in a particular location, but the offer is not as attractive as they would like it to be. An income guarantee would be a lot less attractive if people would call it what it really is. An income guarantee, which is provided to someone independent practice, as distinguished from hospital employment. An income guarantee provided to somebody in independent practice is nothing but a forgivable loan. And the risk associated with that income guarantee is on the physician. It's not on the hospital, it's not on the group, it's really on the physician. So we're gonna talk more about income guarantees for physicians in independent practice. But it's very important that if you take an income guarantee that you take it and the lowest amount that you really need, or that you make sure that income is going to be sustainable once you're off the income guarantee so that you're not stuck in a situation where your income is going to drop, and you're going to be tied to staying in the area or having to pay back alone, if you leave. And we'll talk about that more in detail later on in this talk, Another common mistake is accepting a hospital employed position without a firm understanding of how your compensation is going to be set. When the initial term of employment is over. Hospital employment has really just begun to take off as a trend in neurosurgery over the past few years. And we are finding that we do receive calls from candidates who find that their compensation when their contract is over, is not being set necessarily the same way that it was set initially. And it's not saying that you shouldn't take the job. It's just saying that you should have a good understanding of how raises will be determined, whether your compensation may go down and what factors would influence that. It's important to ask those questions when you're being recruited, because once you're there, you get your family settled and it's hard to move. Well, let's talk a little bit about compensation. What would your compensation depend on? A lot of times, people want to know what they should make by looking at the MGMA numbers. One thing I want you to know about is I wanna make sure that you know, that there is a lot of compensation data available about what neurosurgeons are making nationwide and that compensation data is available through the MGMA. It's available through NERVES, which is a large nationwide organization of neurosurgery practice administrators. And it's also available through the AMGA and Sullivan Cotter, which is very popular as a benchmarking tool, but the gold standard is always the MGMA data. And one thing that you should know about the NERVES data is that it's fantastic data, but it does at least currently lag one day to a year behind the MGMA data, just because of the timing of the survey. There's very little subspecialty data available. There is some subspecialty data available for peds, but sometimes people call and they say, well, what does an endovascular specialist in the Midwest make? And that kind of data is not commercially available. Your own compensation however, is not going to generally depend on the MGMA data or any other data it's going to depend on what your clinical interests are. It's going to depend on how busy you are. It's going to depend on where you live because a neurosurgeon in one part of the country is likely to make a very different amount than a neurosurgeon and another part of the country, just because the reimbursements are different and the malpractice climate is different and the level of competition is different in the area. And it's also going to depend on your employment model, if you are in independent practice, what your compensation depends on is how much do you collect in professional revenues? And have you successfully developed any ancillary sources of income? For example, through investment and outpatient surgery center. If you are hospital employed, then the hospital is actually getting all of the facility fees and all of the technical revenue from what you do. And the hospital has really a much larger bucket of money to work with in determining what you are worth to the hospital, your services have what they call a halo effect. It allows the hospital to make money in a whole lot of different ways that are related to your services are dependent on your services. But the reimbursement for those things, is not reflected in your professional billings. So you may find that you are able to make significantly more money as a hospital employee than you would in independent practice. One of the interesting things that we found is that compensation has been increasing. In fact, it increased almost 17% from 2010 to 2011, which is very interesting because we've seen that reimbursements are decreasing, not increasing. What is going on? Reimbursements are going down, but compensation is up. There are three possible explanations. One is that neurosurgeons are just busier than they ever are. And in fact, the data does show that neurosurgeons are working harder than ever and doing more cases. And so you're working much harder for the money that you're making. Another thing that's happening that we're finding is happening is that pay-for-call is increasing. And I want you to know that NERVES the National Group of Neurosurgery Practice Administrator, which really does produce an outstanding survey that I highly recommend everybody purchase through NERVES if you possibly can, they actually collect and publish pay-for-call data every year. And the trend towards increasing pay-for-call is very clear and that can be very helpful when you are negotiating a pay-for-call. Also hospitals are finding ways to subsidize neurosurgeons who are in independent practice by offering them medical directorships. These have to be real in order to be legal. It's not just a sham way to make more money and tack it onto what you're making, but it does offer the opportunity for hospitals to think about how a neurosurgeon who's a special resource in their community can help them develop a program in a certain area. And it offers the neurosurgeon a way to be compensated with a salary for those services. Some other things that we've seen happening, we've seen that some hospitals are helping to take over some of the overhead that some private practices have. They might employ the receptionist and the office staff the practice employs in order to help them decrease their expenses. Those staff actually become hospital employees. But the biggest thing that we think is increasing the compensation of neurosurgeons is a trend towards hospital employment of neurosurgeons and the competition for neurosurgeons in the market and the hiring market is fierce. And there is really a shortage if you are just looking at market demand for neurosurgeons. So hospitals have bid up the price of the candidates and they are employing neurosurgeons and paying them something that they think the neurosurgeons are worth to the institution, which is often significantly more than a neurosurgeon could make an independent practice. Another thing that might be reflected in the data is surgeons developing more ancillary sources of income. However, I'm not convinced that that's actually shown in this 17% increase that we see. And the reason I'm not convinced of that is the way that the MGMA collects their data. The MGMA only collects all of the data that that comes through the practice. And a lot of times people own shares in a surgery center or other ancillary sources of income outside of their practice they own those shares individually. Well, I wanna talk about compensation for a moment because a lot of times people will call me asking if I can help them compare two offers as a way of deciding which job to take. They'd like to know whether or not they should take a particular job because they're offering so much money. And I wanna offer you a different way to think about compensation. Higher compensation only makes a job better if you really intend to stay in that place for the long term. Sometimes people who have a lot of debt coming out of residency are very tempted to take very lucrative positions in places where they don't intend to stay in order to pay off their loans and get out of debt and get on a firm financial footing. But if you think about your career like a pyramid, you can see how much work goes into building the base of that pyramid, the base of your career, all the work that you've put in, in the beginning years and developing successful referral patterns, that is an enormous amount of work. And if you don't intend to stay, you're gonna leave you have to pick yourself up and move and then redo all of that work to develop a successful referral base all over again, and developing those referrals. Developing that Goodwill is just an extraordinary amount of work. I would say that even though you might get a much bigger guarantee in some places, that's not necessarily a great reason to take a job there, because if there's a job where there's volume available in a place where you would like to stay, you might not be guaranteed such a large amount coming in, but you'll be able to develop the surgical volume and stay in a place that you wanna practice and have your practice develop over time so that you don't have to continually go out chasing new referrals. Another thing that people often don't understand, especially when they are just graduating from their residency programs or completing their fellowships, is that how will you will be compensated really depends on who's employing you. If you are being employed by a private practice, there is one type of employment structure or really a couple that are possible. And we'll talk about those in a minute. And if you are going to be employed by a hospital, there are different kinds of compensation structures. Let's talk first about what happens when you join an independent practice, suppose you are in practice with three of your best friends who also happen to be neurosurgeons. And you all are thinking about bringing on another neurosurgeon into your practice. Well, you all could get together and say, we're going to provide a salary ourselves to the new person that we're hiring. What will that salary depend on? Is it going to depend on the MGMA data? Does it matter what the MGMA says a neurosurgeon makes, no, really it doesn't what you're going to pay if you're paying out of your own pocket is an amount of money that you think that the new person can generate in their first year and you won't lose your shot when you employ that new person, just like any other business. One of the things that I really like about having an independent practice sponsor the salary for the new neurosurgeon itself is that all of the surgeons that you're working with are really deeply vested in your success. They are undertaking the financial risk for themselves of bringing you on. And that's a very considerable risk. If somebody, if a practice is paying 350 or $400,000 or more, that's a very considerable financial risk and they're gonna work very, very hard usually to make sure that you are successful so that they don't lose their investment. The salary and bonus that an independent practice can provide are often negotiable. And usually you come in with a base salary and then a bonus once you cover your expenses, those expenses include your malpractice and your share of the overhead. But that bonus could be a hundred percent of your collections. It could be 50% of your collections over your expenses. It could start at 50% and increased to 85% the next year. So that's something that is negotiable and is different for every practice. We also have worked with practices where they just provide a base salary for the first couple of years until you make partner and there is no bonus. One thing that's important to understand is how is the money that your practice receives for your services while you're on call How has that factored into your bonus calculation? Sometimes there are misunderstandings about that and that can lead to a lot of bad will between people. So it's important to clarify when you are coming in the door, whether or not that pay-for-call will be counted on your revenue generation side of your balance sheet. It's also important to talk to the people that are working with very frankly about whether or not the amount of money that you are hoping to generate through your own code activity is really realistic in the first year. Sometimes people get scared when they see how expensive they are as employees, and they see that they're not really getting their practices up and running as fast as they would like. Another way that you can be compensated when you are just joining a practice is to have the hospital, the local hospital that is working with the practice sponsor an income guarantee. And I want you to imagine yourself in this position, imagine that you and your friends are looking to bring on a new neurosurgeon into your practice. And you say, wow, you know what? We could probably pay a new guy or girl $400,000 and we think that they can generate that much and have a bonus. But if I do look at that MGMA data, I see that a lot of people are making a lot more than that. And we're really afraid that we're gonna lose candidates over money. And we are nervous that we're not going to attract somebody to our group because the competition for candidates is fierce. We would like to be able to pay something more competitive with what other places are paying. And what we've heard that the hospitals are paying a whole lot. So what will you do? You'll go to your primary admitting hospital and you will seek some help. And the hospital will conduct a means analysis, which they are required to do under federal law. And they will, if they determine that there is a need for another neurosurgeon in the community, they will be able to offer to finance the salary of the new person. And that would be done at a much more competitive level usually than what the practice itself can provide. Well, what is an income guarantee? An income guarantee is a term of art. It has a very specific meaning in, in recruitment. It refers to a forgivable loan that a hospital can extend to you as an independently practicing neurosurgeon if you are joining an independent practice in the community or starting your own practice in the community, it's designed to help you financially, while you get your practice started, if your production is high enough, you earn the guaranteed amount and the hospital doesn't have to pay anything. If you don't earn enough to actually generate the revenues so that you're taking home, as much as they have promised you, you would make, then the hospital has to make up the difference by loaning you the amount between your earnings and the amount that they guaranteed you, that you would make. There are two kinds of income guarantees one of them is a net income guarantee. That's the most common type of income guarantee and that's the one that you want that basically guarantees that your take home income based on your expected revenues, minus your expenses is going to be a certain amount. The other one, I think is a little bit of a trick it's called a gross collections guarantee, and that targets the revenue number before subtracting expenses. I don't ever recommend that somebody take a gross collections guarantee because until you practicing you really don't know what your expenses are going to be. So sometimes people feel that an income guarantee is a little bit like this, it shackles you to a community. Why is that? The reason why is because in order for a hospital to provide an income guaranteed to a physician in independent practice, there has to be a documented community need for the specialist. So when you're recruited on income guarantee to come serve a community, and the hospital provides this money to you, it also obligates you to stay there and serve the community need for a certain period of years. And it is true that every year we get calls from people who say, gee, I was brought to this community on this income guarantee of 700,000 and the guaranteed my income at 700,000 for two years and I bought a house and I was counting on being able to pay my mortgage. And I depend on that money, but now that I've been here, I'm not generating enough volume to really make 700,000. And I'm worried that when my income guarantee is up, my income is going to drop and I'm going to have to stay here and provide neurosurgery services to the community for the number of years that I am contractually obligated to do. So because they gave me this income guarantee. It's important to understand how the forgivable loan, component of an income guarantee works. And this will explain why some people can feel a little bit shackled to their communities when they're on an income guarantee. Usually the hospital will loan you the money that you need to make the guaranteed amount. And they will forgive the loan if you stay in the community and practice neurosurgery for a certain period of time, the forgiveness period is usually two years for every one year that you're on the guaranteed. That is by the way negotiable, but the two years forgiveness for every one year that you're on a guarantee is normal and customary in recruitment nationwide. So it could look something like this slide that I have up in your run, perhaps the hospital would have had to have loaned you a hundred thousand dollars in order for you to make the amount that they guaranteed you and year two the hospital might have to loan you $60,000 in order for you to take home the amount that they guaranteed you, then loan forgiveness starts. Basically you are $160,000 in debt to that hospital, but if you stay in year three, they'll forgive $40,000 of the loan, and if you stay another year, they will forgive another $40,000 of the loan. And so on until you're six, when the remaining $40,000 as a loan is forgiven and you're free and clear, you will never have to actually pay that money back out of your own pocket. What happens however, if you decide that you really wanna leave the community? A lot of times you will actually have to pay that money back, or you will have to look for another job where a hospital will provide a very large signing bonus or something else that will help you pay back that loan that you had. It's important to distinguish short term compensation when you're joining an independent practice from long-term compensation. And I want you to know that the way that practices compensate the partners among themselves is very important for you to understand and it's important to make sure that there is a good cultural fit. There are lots of ways that partners can agree to share revenue and share expenses. The first way is very, very easy. It's just a straight income sharing arrangement. Imagine you are in practice with three of your best friends who are also neurosurgeons, and you all say, you know what, we're all for one and one for all, we're all gonna generate what we generate, but then we're gonna put it all in an account and we're gonna divide it all up equally and we're gonna divide up our expenses equally as well. And that can be problematic when production between partners varies widely on a regular basis. But I will say that some of the happiest groups that I know are income sharing groups, it incentivizes collegiality. It ensures that there is no competition between partners for paying cases. And if you have people who produce at roughly the same level every year, that can be a wonderful atmosphere within which to build a practice, especially as a junior person who might really want a senior person to be willing to scrub in with them on some cases when they're done with their residency program. Just the opposite of that is a pure expense sharing collections based arrangement, where the partners simply eat what they kill and share expenses. And oftentimes the fixed expenses in this kind of arrangement are shared equally, but the variable expenses such as a PA are shared unequally, depending on utilization or productivity. This can foster some very significant competition between partners. And there are actually areas of the country where we have seen Exodus of several neurosurgeons because the competition was so fierce and so ugly, but it is inherently fair, right? I mean, if you've produced it, you take it home. And if you wanna do 400 cases, and the other person that you're practicing with wants to do 200 cases a year, it'll prevent arguments over you all sharing the money that you're generating and will prevent the high producing person in the practice from feeling like everybody else's taking advantage of them. There are of course hybrid arrangements. You can have a part income sharing, part production based arrangement. And that is often very useful in independent practices where people want to develop sub-specialized neuro surgical care, where the partners in the practice all recognize that everybody has a value, even if the government does not and the insurance companies don't value all neurosurgeons services equally through reimbursements. The partners recognize that each person has a value and they will agree as a group that they want to have a functional neurosurgeon in the practice. And someone focused on brain tumors and skull based in the practice and somebody focused on spine in the practice. And maybe even somebody focused on pediatrics in the practice, so that they can provide the full spectrum of neurosurgical services. And they're all gonna share income to a certain degree and then past a certain point, it will be based on what you collect minus your expenses. Then we've even seen some practices saying, you know what? One of the biggest problems we have is that we're very committed to serving the entire community, but a lot of our community is uninsured. And we would like to make ourselves insurance blind as a group. And what we've seen, some of those very creative and very committed practices do is put everything in a pot and divided up according to RVU so that people were not concerned about whether or not their patients were insured or uninsured, and that definition of the practice to serve the whole community. Now, let's talk about the compensation models that you could have if you are hospital employed, the easiest one is a straight salary arrangement. That's particularly good if you have a lot of administrative responsibilities or research related responsibilities, which you could also have a salary plus a collections based bonus. Now I know a lot of hospitals that work this way, and I do know a lot of neurosurgeons that are happy in this kind of arrangement, but I want to give you a word of caution. We also do hear from a number of neurosurgeons who have a collections based bonus that they don't control the people in the hospital doing the collections, and guess what the people doing the collections, aren't doing a very good job of it. And because they're employed by the hospital and everybody reports to HR instead of to the neurosurgeon, they feel really powerless to do much about it. Another thing that's very important to think about is whether or not there's a good payer mix in the community. If you are there as a hospital employee and the hospital is going to dictate that you have to see all of the patients, but a lot of people are uninsured or poorly insured. You could really lose out if you have a collection space bonus. To me, the ideal kind of situation for a hospital employee, if there is going to be a productivity bonus is to have a base salary plus an RVU-based bonus. And you might find in talking to hospitals that you get some pushback because the RVU based bonus is not actually that common in a lot of specialties outside of neurosurgery, but it really is a very good and very appropriate and very common way to reimburse neurosurgeons who are hospital employed. And it does make you insurance blind and it makes sure that you get paid for the work you do, whether or not the patients are insured and whether or not the hospital staff does a particularly good job of collections. There is one last way that neurosurgeons are compensated when they're hospital employees, and that is on a collections minus expenses basis. Again, I have seen some people have this arrangement and they are happy with it. There are some advantages to being employed by a hospital when it comes to expenses. For example, malpractice insurance for a hospital employed neurosurgeon is usually significantly less than it would be if they were in a single specialty neurosurgery group, I personally would never take this kind of a compensation arrangement because I don't control the people doing the collections. I don't control which patients I'm going to see and whether or not they're insured. And I don't control my expenses either. And we have definitely heard reports of neurosurgeons where they say, gee, now they're allocating a lot of expenses to my balance sheet that I'm not convinced are mine. So I think it's important to make sure that there's a lot of transparency and that you're very comfortable with the level of transparency that you're going to have. If you are going to work for a hospital on a collections minus expenses basis. This talk would not be complete without discussing compensation models in academics, especially because so many neurosurgeons do have a very strong academic interests and are employed by academic institutions. One of the things that's important to know about academics is that there aren't really that many things that are particular about academics, other than an academic productivity bonus that relate to the compensation model. Really, you could be an independent practice, which is also an academic practice, or you could be in a large hospital employed academic group. But one of the things I do want you to think about is what is the impact of your compensation structure on your ability to make a living, especially if you're in a less lucrative subspecialty, if you are with a practice that is essentially an independent practice, even though it is academic in nature, you may find that you're really not able to do very well financially, but if you are in a hospital employed practice, the hospital is again making all of the technical fees and facility fees off of what you do and the hospital can essentially subsidize your practice. It's also important to think about the impact of your compensation structure on your ability to have meaningful protected time. If you have a highly production driven compensation structure, what does it mean really for you to have protected time, except that you can take time off to do your research and you won't get paid? I think that if you have a protected time, it's much, much better to be on a straight salary kind of model. And it's important to think about the impact of your compensation structure on the relationships with others in your department. There are some academic departments where they put everything in a pool and they divide it up and that can be a very politically charged process where you have some neurosurgeons doing pediatric neurosurgery, which really doesn't be inverse very well. And some running very lucrative spine based practices. Well, I'd like to talk a little bit about the pros and cons of hospital employment. There are a lot of advantages to being employed by a hospital, and that is why we are seeing an increase in hospital employment. The main one of course is financial. You are likely to earn more money right away because the hospital sees a lot more revenue from the services that you provide, than you would make in professional fees. So they don't have to wait for you to get a really big volume going in order to make money off of what you do. And you are worth a lot to them, not just because of your neurosurgery practice, but because you will allow them to have trauma center designation and that kind of thing. And that allows the hospital to make a lot of money in a lot of other areas as well. Also, there's no need for you to run your own practice. And of course, most of you went into neurosurgery because you're interested in neurosurgery, not necessarily because you're so interested in business and running a business is a big deal. It's not easy to be in charge of hiring people and firing people and collections and negotiating leases and all of that kind of thing. And if you are employed by a hospital, it's a much cleaner arrangement where you pretty much have to show up and go to work and practice neurosurgery. It's also really nice when you're employed by a hospital that the RVU-based bonus structure, if that's what you have, can make the payor-mix irrelevant. And you don't have to worry about getting into arguments with your partners about how to allocate income or expenses or overhead. That said there are some real drawbacks to being employed. The most significant of which is that you are an employee and although nobody thinks it's going to happen to them, you can be fired. And we have certainly seen a number of neurosurgeons who were very surprised when they were asked to resign or have their employment terminated, or had their hospital failed to renew their contract for employment. If you're in your own practice, well, it's very hard to be fired from your own practice because you're the boss. Another thing that is important to know is that your agreement with the hospital might change once your contract term is over and changes in your hospital administration might mean changes in your practice, and it might also mean changes in your compensation. Hospital Administrators do from time to time change jobs, just like all other people. And if you are renegotiating your contract at three years, the people that you're working with three years from now might not be the same people that you are working with today in negotiating a contract. So that's important to know. Another thing that's very important to know. And a lot of people don't really think about is that you probably are not going to be really in charge of your mid-levels and your support staff. And that's really very important for neurosurgeons to understand, because you might have support staff, office staff that are not really doing the job the way you want, and your only recourse might be to complain to HR. If you're in a private practice, you can simply terminate that person's employment and move on and find somebody with whom you are happier. I think it's also good for us to think about some of the advantages and disadvantages of being an independent practice. Some of the advantages of course, are just the opposite of being hospital employed. You're not an employee, you control your own destiny. You can't really be fired from your own practice, unless your partnership has some way of getting rid of somebody that they don't like, which is usually the case by the way. But it's very different than just being on the wrong side of a hospital administrator. If you join a private practice, the practice is much more likely to be well-established an old practice. Why, just because hospital employment is relatively new, there are some very well-established hospital employed practices, but most of the large well-established practices outside of academics are still private practices. And you're likely to have significant mentorship available to you as a result of the practice being so well-established, and that the well-established nature of the practice will help you develop volume. Also you and your partners will control the vision and direction of the practice. And you will have control generally over when you retire, how long do you wanna work? I'm not so especially convinced that every neurosurgeon that is employed by a hospital has full control over when they wanna retire. You also might be able to develop ancillary income sources on your own, such as investment in a surgery center that will help you weather some of the ups and downs of the changing healthcare environment. However, there are some disadvantages. If there weren't some disadvantages, we wouldn't see so much hospital employment. The biggest one is you usually make a lot less money to start in independent practice. You also need to run your own practice. The insurance status of your patients will impact your revenues, and that might impact the way that you practice malpractice risks and reimbursements will also impact the way that you practice in the cases that you're willing to take on. And of course, allocating revenues and expenses among you and your partners might cause arguments well with all of this talk about compensation. I guess what I wanna say is it's very important to understand, but I don't want you to "Miss the Forest for the Trees" If you go back to the beginning of this presentation, the thing that I think is most important for everybody to know is that if you're happy with where you're living, you're happy with the people that you're working with. And you're happy with the practice you've built. It's much more likely than not that you're going to be happy enough with your compensation that you're gonna want to stay. One thing that people sometimes don't think about enough is proximity to family. That's especially true when you have moved one place for college another place for med school another place for your neurosurgery residency, then someplace for your fellowship. You've uprooted yourself a lot and you are accustomed living away from your family and you're still really young. So a lot of times it's easy to discount how important it might be to be close to family when grandchildren come along or when your parents are older and they need care, and you might really want to be there for your parents. Of course, some people have the 500 mile rule, and it's very important not to be too close to family for obvious reasons. A lot of times people ask us for advice about questions to ask during the telephone interview. And I've provided you with a list of questions here on this slide. The main thing to know about the telephone interview is that, it's important to get a feeling for what the practice is about, what the goals of the practice are in recruitment and what it is the practice is looking for. I definitely would not ask any questions about money on that first phone call, it's just really a brief feeling each other out to see what they're looking for and for them to see what you have to offer to decide whether or not it's worthwhile to bring you in for an interview. And also people ask us frequently for questions to ask on a site visit. I want you all to know that on our website @www.rosmansearch.com, there are articles also with questions to ask when you're on a site visit and during a telephone interview, and a lot of other resources for candidates as well. But the thing that I want you to focus on, on a site visit really is, is there a good culture fit? What are your values and what are the values of this practice and do they match? And what is the need in the practice? What need are they trying to fill? If you really focus on those things, you will get most of the answers that you need. There are important questions to ask in academics as well. The most important of which is about mentorship, who is going to be your mentor? It's increasingly difficult of course, to get research funding and pushing that boulder uphill all by herself is a very, very difficult thing to do. In my opinion, you're usually better off to go someplace where you have great mentorship than to go someplace where you have a huge startup package, but you're going to have to figure out how to get that funding up by yourself. It's also very confusing to people when they're putting together a proposal for how much money they need for their research, they feel like they there's a particular amount that they ought to ask for, but they often don't look at what core facilities are available. And it's important to make this process of how much to ask for a collaborative process with your prospective future employer, involve them in that discussion. Don't just give them a big number that's going to be scary to them, outlined for them what you think your needs are and find out what the institution has. Another very important thing for you to ask during your interview is to understand what is the relationship between the hospital, the physician practice in the medical school, because if different people are in charge of all of those entities, sometimes you have to jumped through a lot of hoops in order to get your research initiatives through. Well, people always want to know when it's appropriate to ask about money, vacation and benefits. And I would say on the first visit, don't do that please focus on learning about the practice, learning about their needs and just getting to know the people. It's really just like a first date. At the second visit it's appropriate to ask about money. The vacation and benefits should become clear when you get an offer, if you get an offer. And if it isn't clear, then you can clarify it then we have definitely seen neurosurgeons go on a site visit and the first thing that they told the hiring practices that they need to get 10 weeks off. And that's usually a turnoff in an interview, even if it's for good reasons. The key question of course, when you're evaluating any opportunity, and I really don't want you to lose sight of this is can you develop a successful surgical volume? And I don't want you to confuse this with money because a lot of people are very focused on how much someone will guarantee you. If somebody is willing to guarantee you a lot of money, but the opportunity to develop a successful surgical volume does not exist more often we find that people bounce out of those jobs and have to look for new jobs because that bargaining power with the hospital often does not last forever and surgeons generally like to operate. Usually aren't very happy when they're not very busy, the main power control and leverage that you have comes from your opportunity to be busy. How do you find out whether or not there is a successful surgical volume available? One of the most important things to ask about is current wait times, patient wait times and what the existing volume is and what the local competition is and where your referrals will come from. And if you have any doubts about it, I would encourage you to actually speak with some of the referring physicians that whoever is hiring you says we are going to be willing to refer you cases. It's important to ask about support for the practice. I have had practices call us to recruit for them and when we asked questions about support for the practice, we found that they had recently lost their anesthesia group. For example, well, you just know that if they lost their anesthesia group and they're relying on local tenants for anesthesia, that is not a very good time to bring somebody into the practice. So it's important to make sure that they have the support that they need for you to be successful as well as if they have the equipment that you need. And we're finding that this is critically important, especially in endovascular neurosurgery, over the past year we've had quite a few calls from endovascular neurosurgeons who were promised that there would be a Bi-planer and when they showed up, there was no Bi-planer and it took them a while to get the Bi-planer. And in the meantime, they were very unhappy that they were not able to get their practices up and running. A lot of people love to quantify whether or not there is enough demand in a community for a neurosurgeon by looking at demand guidelines. And the government, when they're doing needs analysis uses this often quoted number of there should be one neurosurgeon per 100,000 people in the population. We heard this number and we didn't know where it came from my team and I, so we thought that we should research it. And when we researched it, we found out that it came from the 1975 study that was based on data from 1974. A lot of things have changed in that time, especially with respect to the subspecialization of neurosurgeons and the numbers and types of different procedures that people can use. So I'm actually not sure that that one per 100,000 number means anything, anymore. Well, once you've vetted the opportunity, you are negotiating a contract, you're really at the final stages of evaluating the opportunity. And I wanna talk with you a little bit about negotiating a contract, the contract negotiation process is actually part of evaluating the opportunity. It's gonna tell you how well you work through problems with the people that you are thinking that you're going to work with. It's really the last step in the interview process on both sides. If you're unreasonable, they may very well pull your offer and decide that they don't wanna work with you. And if they're unreasonable, you may very well decide and maybe wisely so that you don't wanna work with them. Well, we've covered a lot of material and I wanna thank you very much for hanging in there with me and give you just a few points to take home. The first is that one of the most critical things for you to evaluate when you're looking at a neurosurgery practice opportunity is your ability to develop a successful surgical volume. It should be in a good environment where people are prepared to support you, and it should be in a location that is acceptable to you and your family, which may or may not be ideal, but should be good enough for you to stay for the long-term. Aaron

- Well Judy, very spectacular just don't choose a job for the money. I don't think really money will keep people where they are forever and most people don't leave the job because of the money. It's because the philosophy of the practice and the case-mix is not what they're interested in. So I wanna emphasize one more time that when we look at a practice, look at the philosophy, look at the case mix. Look, how do you feel happy if you go home every day and work with the neurosurgeons that work there, because your philosophy in terms of the practice is the same. The biggest mistake is to follow the money as 80% of the neurosurgeons leave their first job within the first few years of their practice. Moving from one job to another does have significant issues because number one, you have to rebuild all the relationships you worked on. And number two is every time you move more, obviously people suspect why is that, that person is just having so much difficulty establishing a practice.

- Exactly

- And if they come to my practice, that means they're gonna also move pretty quickly and therefore that makes them potentially a less attractive candidate. Any other big mistakes people make Judy in terms of choosing their practice you wanna mention.

- You know, like I said earlier on the top the other big mistake that I see people make especially when they're in a lot of debt is to go into a situation where the politics are bad, or they're not really sure that they trust the people that they're working with, or they're not really sure that there's a successful surgical volume to be developed, but somebody is offering a big guarantee and they think that they can be protected by their contract. And one of the things that's very hard for people to wrap their brains around if they're not lawyers, is that a contract can't actually force people to do anything. All a contract is, is evidence of an agreement. And if somebody chooses not to make good on their promises, all you have as a remedy is to point to the agreement and say, well, I can sue you over this, but if you sue your employer, good luck finding another good job after that, people will peg you as litigious and they won't want to employ you, or you could have whatever other remedies are set out in the contract, but who wants a lousy job and a lawsuit?

- I agree hundred percent, really when you start a job, you really, no matter what the contract is, you really have to put up with a lot of things. So choose your job because, again, philosophy, work environment and the family. I don't think we should put the money first. At least that's my personal philosophy here. And thank you again for your valuable comments. And we will look forward to having you again with us, Judy.

- Thank you.

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