It’s decision time.
There you are, a soon-to-graduate resident, at your disposable kitchen table in the apartment you’ve been renting for the past three or four years, with a blank yellow notepad in front of you.
You draw a line in the middle of the page and start comparing the two offers you’ve received. On the first line, you write the most obvious number to compare: Dollars/Hour.
Then you move on to the next criteria, right? Wrong.
Doing an apples-to-apples comparison by comparing hourly compensation rates is a great way to lead yourself astray. This may be your first job search ever or at least in a very long time. It is not like that hourly job you had scanning tickets at the ski valley.
How to do a real contract comparison
As the country’s largest physician-owned acute care group, US Acute Care Solutions has created a compensation and benefits package we believe is second to none. Those benefits translate into real dollars earned and saved, but it would be easy to miss that if you look too narrowly. So, let’s do the math.
Most full-time emergency medicine physicians work in the ballpark of 130 hours/month. Just for comparison’s sake, let’s say one group is offering $160/hour and another, where you would be working as an independent contractor, is offering $200/hour.
The independent contractor group obviously pays more, right? Not so fast. Let’s go to the math.
How to value a 401(k) or retirement package
US Acute Care Solutions provides a industry leading and fully company-funded 10% contribution into your 401(k) over and above your total cash compensation. So, if you make $250,000 a year, we contribute an extra $25,000 to your 401k, regardless of whether you contribute yourself or not.
If you divide that amount by the hours you work that year (approximately 1,560), that amounts to a little over $16/hour in additional compensation.
Equivalent added pay: $16/hour
Business Expense Accounts
At USACS, we provide $4,000 per month for CME and business expenses, plus an additional $4,000 during your first year, since many physicians that join us are new graduates and will be taking their boards. But for argument’s sake, let’s just take that $4,000 and divide that by the 1,560 you’ll be working each year.
Equivalent added pay: $2.50+/hour
Health insurance benefits
Since health plans vary so widely, it can be difficult to value these for the purposes of apples-to-apples comparisons. Everything from the quality of the network, to the deductible, to the premium and your family size can impact the cost of health care, and it will change every year.
But that doesn’t mean you should ignore it. If you go work for a group with and independent contractor model, you’ll be on your own for health insurance. Besides the significant amount of time spent shopping for plans, that will also be a considerable financial cost to you.
USACS, of course, provides excellent health insurance for both you and your family, with a variety of plans to choose from. Though the value of the plan will vary, for this purpose let’s assume you choose one that represents about $32,000 per year – a fairly middle-ground amount.
Equivalent added pay: $20.50+/hour
At USACS, all full-time physicians are also owners. The belief that #OwnershipMatters is fundamental to our group and a critical component of why we brought together some of the best physician-owned groups in the country to create USACS.
But let’s take it down to brass tacks. If you join USACS, you will be granted $75,000 in equity over your first five years, or $15,000/year. That translates into real dollars that can significantly grow with company success, but we like to think it adds something more: a real stake in our group, and a culture of shared promise and shared reward.
Baseline equivalent added pay: $9.50+/hour
As an independent contractor, it’s likely that, even if your group provides insurance, it will have some gaps. As you compare contracts, it’s always important to check not just that you are being provided medical malpractice insurance, but that it also critically includes two other aspects: tail coverage, and all associated expenses.
Many groups provide insurance and tail, but say that if you get sued, you have to pay some portion of the lawyer’s fees. That could run into the thousands of dollars. And how much could lack of tail coverage cost you? Well, let’s just say this: never, never take a job where the medmal insurance does not include tail coverage. That’s a check you have to write before you can leave. Don’t put yourself in that nightmare position of wanting or needing to leave a job, but not being able to afford to do so.
Equivalent potential losses from not having good medmal: unknown, but potentially thousands.
What is the self-employment tax? It is an additional tax you will have to pay if you take a job as an independent contractor. In the U.S., we owe something called the payroll tax, which is split between the employer and the employee. But, if you are effectively your own employee (as all independent contractors are), you owe both portions.
This is often an unexpected and very unwelcome hit. You may be lured into a job with seemingly high hourly compensation, but that comes back to haunt you at tax time.
Equivalent loss from self-employment tax: -$7.80/hour
Paid parental leave
If you plan to take a job at a group which does not offer paid parental leave, then you have a question to ask yourself: do you want to have children, and if so, how many weeks do you plan to take off when they are born or adopted? All that time will be lost income for you.
Let’s say you take eight weeks off. Some groups may require you to use short-term disability to take time off. Besides the rather glaring fact that having a child and starting a family is not the same as becoming disabled, that is still only worth a percentage of your pay, say 60%. Adding insult to injury, it doesn’t even begin until after a “waiting period” that can vary in length but is commonly 14 days.
In contrast, USACS provides birth mothers 8 weeks of paid parental leave at 100%, beginning from day 1, plus another optional four weeks at 50%. Fathers, partners, or non-primary parents also get two weeks paid leave at 100%.
Equivalent loss from taking eight weeks off without pay: -$46,600 per pregnancy.
A true apples-to-apples comparison
There are a few other situations we haven’t touched yet, such as nights and holidays, or even productivity pay. These are significant aspects of our compensation at USACS. We also have a ground-breaking paid military leave policy which compensates active service-members, keeping them and their families whole if and when they are deployed.
Still, just with a few calculations you can get a sense of how to truly evaluate two contract offers side by side.
If you add up all the per-hour cash equivalents hypothesized above, it turns out that a $160/hour package at a group like USACS comes out to something more like $210/hour when you count all the benefits. Meanwhile, the $200/hour offer from the independent contractor group is more like $193/hour, or even significantly less if you get sued or want to take unpaid leave for having a child or going on military deployment.
Seeing the big picture
At USACS, our recruiting team has developed an apples-to-apples comparison calculator provided to everyone who is considering a full-time offer from us (if you’re interested, search our careers page and contact one of our recruiters). We developed it to help our potential hires see what the it really means, compensation-wise, to work at a physician-owned group with a leading benefits package. When you add in the intangibles of group camaraderie and clinical excellence, it’s a winning formula you can’t ignore.