Bonuses: a nice perk to physician salaries

But experts warn it is important to understand the downside

Batya Swift Yasgur MA, LMSW | September 8, 2015
Sign on and retention bonuses

If you’re a physician in the job market, you’ve probably heard about employers that offer signing bonuses and/or retention bonuses. Many do offer jobs with these perks, and employers use them to encourage physicians to sign on the dotted line, or to remain with that group for a certain period of time once the contract has been signed.

And while it’s nice to be offered a bonus just to take a job, you need to be careful when accepting these perks. Both have potential downsides that you need to understand so you don’t find yourself owing your new employer money a year or two down the road.

Understanding bonuses

Signing bonuses. When physicians are offered signing or sign-on bonuses, they typically receive relocation expenses and/or a sum of money. Student loan repayment can often be covered by signing bonuses.

There can be a big catch, however. As Steve Look of The Medicus Firm, a national physician recruiting company based in Dallas, explains, if you terminate your contract early, or if your contract is terminated by your employer, you may be required to repay some or all of that signing bonus. The amount you have to repay may be prorated—leave one year early in a two-year contract, for example, and you may be on the hook for half of your bonus—so you want to make sure you really want to stick around before you sign on and cash that bonus check.


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Because signing bonuses typically have a repayment clause, many experts urge physicians to put the bonus in a separate bank account and forget about it, at least until the repayment period is up.

Experts also say that physicians should not view a signing bonus as the most important factor in their decision to accept a job offer. A position with a good compensation package, compatible culture and appealing geographic area—even if the signing bonus is modest—is preferable to one with a whopping signing bonus, particularly because other considerations might derail your employment before the end of the contract.

ŸRetention bonuses. Retention bonuses are typically given to encourage physicians to stay with their current group. Mr. Look says this type of bonus also allows employers to reward physicians for hard work without having to change their overall compensation plan.

As with signing bonuses, if you leave before the end of your new contract period, you may be required to pay back some or all of the bonus. There can be another snag if you receive the bonus at the end of the new contract instead of up-front.

Make sure that if you leave before the new contract is up—or if you’re terminated—you get a prorated portion of that bonus money. If you leave one year into a two-year contract, for example, you should receive half of the retention bonus.

ŸHybrid bonus. A second type of retention bonus is more complex, explains Dennis Hursh, JD, of Hursh and Hursh PC, a Pennsylvania-based law firm that focuses on representing physicians.

Say a hospital is interested in buying your practice but wants you to stay on as a physician employee of the hospital. As Mr. Hursh explains, the hospital will give you what can be viewed either as a signing bonus—because you’re essentially a new employee—or a retention bonus because you’re being given an incentive to stay with the practice you just sold.

“The hospital wants you to remain in the practice because you already have a relationship with the patients,” Mr. Hursh explains. “It might be seen as a way of ‘buying’ your goodwill. Patients with whom you have had a relationship are more likely to continue using the practice if you remain.”

As with other signing and retention bonuses, it’s important to remember that these bonuses represent just one factor amid a host of components. And Mr. Hursh says that while bonuses may seem simple, the language used to describe them can be fairly complex. That’s why he suggests you have an attorney review any contract before you accept an offer.

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