Doctors around the country are reporting violations of their employment contracts in the face of the coronavirus pandemic.
From non-competes to contract-breaching salary cuts, we talk about how physicians can fight back.
Kyle Claussen is an attorney and the CEO of Resolve, a physician-founded company that provides support in contract negotiations for over 10 years. Check them out here!
– Hey Z-Pack it’s Dr. Z, ZDoggMD if you’re nasty. Check it out, I recently did a rant that went viral talking about how physicians during this COVID epidemic are struggling to have a voice. So many things are moving right now. From their income stability to changes in what, they signed up for a particular contract and now they’re being asked to do things that are way out of contract. How can we do better in an environment where all the forces are making it so confusing? Well, Kyle Claussen who’s an attorney and co-founded a company, he’s the CEO of a physician-founded called Resolve. They worked with the White Coat Investor and Physician Mother’s Group and all these other groups to help doctors empower themselves to actually take control of contract negotiations and in situations where they really feel lost. Because we’re never trained to do this stuff. And Kyle reached out and he’s like, I saw your video. I want to support and episode where I help to teach you guys about tools that are available to actually support you during this difficult time. So Kyle’s here. Kyle Claussen, welcome to the show.
– Thanks for having us.
– Now, did I miss anything in that introduction about what you do or your background?
– No, you were spot on, you got it.
– No, formal training.
– Zero yeah, zero.
– So tell me when we got on a call because I’m always skeptical. You’re a lawyer and doctors and lawyers it’s like dogs and cats living together mass hysteria. There’s always been this tension because we’re not trained in the legal aspects, in the business aspects and that kind of thing. And yet, we’re sent out in the world to go man the front lines with big organizations now that do have all these legal resources and contractual stuff that favors them. So, how did you sort of get involved in this and what sort of drives you in this?
– Sure, so Resolve interestingly was founded my a physician, you mentioned that earlier. And he shared the same, I think opinion of most attorneys that you just laid out. And he thought it’d be a really good idea to form a company that would supply physicians with the information that they need. So when you’re going through these contract discussions you’ve got someone who’s seen thousands of these contracts and can tell you what’s normal, what’s not normal. What your compensation number should look like, what they shouldn’t look like and really empower you guys, because if you all get the right information you make good decisions. And so it’s not, we don’t feel like we’re doing anything other than providing you with that ammunition to go into those discussions.
– And what is, so this is something, when I signed up with my big multi-specialty group straight out of school. They gave me a big old contract and it had a ton of stuff in it including a noncompete clause, including call schedule and other things like that. And partnership tract and all this other. I could not figure it out. My brother-in-law who was a lawyer, but he was a bankruptcy attorney kind of look at it and said, there is so much stuff in this contract that is terrible for you. You need to go and negotiate it. And I said, I don’t have a clue how to do that and you’re all the way in North Carolina, what do I do? And I just ended up signing it like a dingdong. And so are you seeing this? Are physicians just singing on the dotted line not knowing they have actual leverage here?
– I think absolutely. The statistics would support that too. You know roughly 50% of all physicians leave their first jobs and a lot of that is because of what you just mentioned. They sign a contract that doesn’t work out or the promises aren’t being fulfilled. And so know what we’re seeing today with all this COVID employment issues that are happening is really just a testament to why you need to have a contract that fits your situation.
– Yeah, now what’s going on in COVID specifically because they’re so much happening now that has thrown everything into disarray. Give us the scoop on that and how we can have resources to help that because people are scared.
– Sure, so physicians are just, they’re seeing for the first time right, a situation where they’re not being supported, whether that’s though PPE, whether that’s through other administrative decisions and what we’re seeing contractually is folks that have signed contracts that they have either a base salary or certain production numbers or certain hour guarantees that they’re just being told unilaterally, you’re comps being cut in half. So you’re no longer making x number of dollars, it’s 50% of that. So, you know this is crazy because my wife and I were talking this morning and I’m like, you know people’s salaries are being cut, people are being furloughed. Things are happening right now because the revenue-generating machine in this country is elective procedures. So big physician groups don’t make money on primary care. It’s a loss leader. They don’t make money on preventing disease, that’s a loss leader. In fact, preventing disease costs them money. Elective procedures are what makes them money. And when those have gone away because they have, the entire house of cards starts to crumble. Who is gonna suffer, the frontline physicians because even though they’re there in contract, they’re being told exactly what you said, that their salaries are being cut. And so is this a violation of contract, I mean how do we deal with that?
– Yeah, nearly every contract that we see has a clause in it that says this contract can only be amended in writing signed by both parties. Okay, and so a unilateral decision on that would look to most of us like a breach of contract, right? If you haven’t signed off on this new comp scale, they’re supposed to continue on with what they promised you last year.
– Yeah, but so what leverage do we have if they are saying that they can’t pay you are they gonna then just fire you or lay you off is that a violation of the contract?
– Yeah, let’s walk through your options. I think option one is you agree to sign it right and then your compliant and you’ve lost compensation, option two is you don’t sign it, which forces their hand to continue to pay you or negotiate with you to find some terms that are agreeable or they’ve gotta let you go and they’ve gotta follow the termination procedures of the contract. So minus one of those three things happening, you know it looks like they’re in breach of contract.
– And so are you advising physicians now in the setting of COVID on these things that are coming up?
– Yeah, absolutely, we’re receiving hundreds of emails and calls right now about these situations. Hey, I’m being forced to take paid time off but they’re still wanting me to take call. My compensation just got cut in half. I was supposed to be up for partnership and now I’m no longer up for partnership. They’re pushing that off. My Q1 production bonus, I just killed Q1 and now I’m not gonna be paid this bonus like I was supposed to be. All these questions are flowing in and rightfully so. It’s a time when physicians are, you know for the first time I think feeling some financial pressure from the institutions that are supposed to protect them.
– This is really fascinating to me, because I’ve heard stories about people who were signed up on salary plans and are being moved to productivity plans where they eat what they kill in a situation where there are no elective visits. And I want to say one thing because I think it’s very important that people understand this. Our system is so screwed up that we’re paid to do things to people, we’re paid for volume, we’re paid fee for service or we’re paid in these contracts that involve doing a lot of stuff that isn’t really helpful for patients, when that house of cards starts to crumble, right, and we’re contractually bound to be paid, they just can’t pay us. They just won’t pay us. And so the ultimate ethical and moral question is shouldn’t that system be changed? Yes, but in the meantime we’re gonna need help to protect frontline physicians who’ve invested so much of their lives and their blood, sweat and tears and are now putting their lives at risk to have their contracts violated. And look, I actually have some compassion for the administrative side in that, if they don’t have the money, they don’t have the money. But the problem is, they had years to plan for this. No one did. We knew a pandemic was coming, no one did. It’s their job to prepare us for this, they didn’t. Now what’s gonna happen, the same lambs that go to the slaughter every time, the frontline clinicians are going to slaughter. And it’s just not fair.
– To play off of that. You know you think about 2019 for the first time, there were more employed physicians than there were physicians in private practice.
– That was just in 2019 that that–
– 2019, it’s finally surpassed and so for that situation I think there’s a lot of reasons of why physicians are going employed. But of them was for this financial security. You have a ton of student loan debt, you need a high guarantee amount, you don’t want to mess with billing and administration and all that so they went into this thing. Hey, these large systems, and we all know who they are, you can protect me right? And so when you generate profit over the last five years of a billion dollars a year whether you’re profit or nonprofit, that’s fine you keep it, I’m okay with that. But now the first time, the last two or three weeks we finally have a little financial pressure, you’re gonna throw me out the window. And that to me is the entire employment model is gonna have to be addressed.
– This, what you just said is so important because these people had one job, that’s why we hired them. That’s why we gave our lives, basically to work for them. They had one job, which was to support us during this thing. Now they are trying I think, but they failed at that one job and now we’re laid out. So here’s the question, so if a physician comes, okay, they’re in this struggle, how would they then gauge resolve, to actually help them because what’s the practicalities of that?
– Sure, yeah so right now we’re offering actually some free consultations for this type of thing. It’s our only way to help during this crisis and so they can certainly email that over to [email protected] any questions they’ve got we’re happy to try to answer those.
– We’ll put those links in yeah.
– The other thing that I would want to come of this discussion is just that physicians would start to take a look at becoming a little more empowered right, in their employment. And having some leverage and actually being able to exert that. Because through all the negotiations that we see, we can give you the information. You can say, hey, you’re being underpaid by x number of dollars a year and 8 out of 10 physicians tell us, well, I don’t want to push too hard, right. Well, they’ve treated me really well. I don’t necessarily want to do that and so that’s fine until things like this happen and now you’re seeing how you’re getting treated in return and so I think it’s extremely important to keep that free agency, to keep the noncompetes which I think we need to talk about out of the contract. Because ultimately that’s your leverage. Your leverage is to be able to walk across the street and say, fine, if you want to terminate me and cut my pay, that’s okay, right. But I’m gonna go across the street and I’m gonna compete with you. I’ll just take my pink slip them.
– Oh, this is brilliant so this is what I really want to dig into now. Because I have said to the Z-Pack and I say this to nurses. Now you don’t deal with nurses, nurse practitioners, PAs do you is it mostly doctors?
– So we were founded by a physician and we work mostly with doctors but we do work with nurse practitioners, PAs, etc. on a more limited basis.
– Right, got it. Okay, I tell people, Kyle, that if your organization is not treating your correctly, if they’re violating your contract. If they’re behaving in a way that isn’t very health 3.0. You are morally obligated to walk to a place that will fulfill that calling that you signed up for. And they exist. What stops that and I did a rant on this that I haven’t released yet What stops that are noncompete clauses that these entities put into their contracts. Now, from their standpoint, I’d imagine they say, I’m investing a lot in recruiting a doctor. We’re training him up. We’ve giving him epic training, we’re spending all this money. We’re supporting them with benefits. If they go walk with all that operational knowledge to a competitor or something else, we’ve lost all this money. So we put the noncompete in to keep them from doing that for some period of time. But what’s your take on this?
– So my take is that non-competes are allowed in society in general for places like Google and Amazon that you don’t steal the secret sauce, right? You don’t pull it away and they’ve lost all their RnD money. Healthcare is a different animal. It’s a public interest, it’s a public service. Patients are supposed to have the right to choose their doctor and if their doctor has to get kicked out of town, it seems like those things don’t coexist real well and, you know there are certainly some states, California being one of them that has said for physicians you can’t have noncompetes, you’re not supposed to allow. It doesn’t mean that they’re not getting put into contracts and physicians are still scared on whether they’re enforceable or whether they’re not. And so it would be extremely wonderful if all the physicians would get together and just say, hey, we’re not signing these anymore. Right, we’re forcing the employers to allow us to be free agents in the market. So that way if you fail to protect me in the future, like you’re doing right now, I’m able to go wherever I want and find these other organizations you’re talking about that are actually run well.
– I agree 100%. Like I think we need full liquidity. ’cause like you said, it’s not an IP issues, it’s not an intellectual property issue here. This is a service industry. Unless they’re doing research or they’re doing something super secret, really a noncompete makes no sense. So, you would review their contracts. You would say these are the clauses that you should have them take out. You should say here’s your leverage, here’s how you approach this. Is that how you guys work?
– Yeah, absolutely. So we would say, here’s what some other organizations the ones that maybe run well are doing with their noncompetes. Right, they’re giving you carve-outs for if there is a merger. Right, if you’re terminated without cause like what might happen right now and you’re able to go wherever you need to. You can have a noncompete and still massage it so it’s fair for both parties. Because there are certain examples when a physician would come into town, build up their patients, take all the guaranteed money and then walk and compete that doesn’t seem 100% fair. But the situation we’re in right now is not that. I mean this is a completely apples to oranges discussion.
– Right, are you seeing a lot of physicians leaving employed groups and going into say, direct practices, direct pay practices, kind of going off the grid or is that non a phenomenon that you’re experiencing.
– Well, it’s not a trend previously. I think it’s gonna be really interesting in the next 6-12 months after this thing kinda gets a little calmer and you know Mark Cuban. I’m a sports guy, so he made a comment about how employees are gonna remember how their brands and how their organizations treated them during this and I think healthcare is going to certainly see that exact thing happen.
– 1000% yes and that’s exactly what I said in my video. I said we will not forget what you did when the ish hit the fan. We’re gonna remember how we were treated. And that also mean, that also means right, because I want to give a shout-out to people who are doing this really well because they’re out there. And they are and these are even some MBA administrators that are up all night trying to keep the lights on, trying to keep from furloughing people, trying to find resources. It’s happening. So we cannot paint them all with one brush, I don’t think that’s fair but we will say this. That we’ll remember the good and we will remember the bad and what’s nice, the reason I wanted you on the show when we talked, because remember I was skeptical. I’m like wait, lawyers doing what? What are you trying to do? I got a call with you and within a minute I was like yes, because you can provide the leverage, the support and the training for people who then allow themselves to express with their feet and their skills and their heart, where they want to be. So, they will go to the organizations that are good without this friction of contract and confusion and fear and sort of false loyalty. Almost to Stockholm Syndrome, where you start to believe and love your captor, do you agree?
– I totally agree and so I brought one prop with me for this discussion okay. You know who Curt Flood is?
– [Dr. Z] I do.
– Okay so Curt Flood was the guy who challenge free agency in sports. He was the leader, he lost, but he was the leader and now obviously free agency is so common. The decision by Lebron and this stuff, right? Well, if physicians didn’t have noncompetes. If they had data that showed them the entire market. Here’s every job you can have, here’s all the contract details, boy, it’d be pretty tough for the bad administrators to have an argument against that. And I totally agree there are some great administrators out there, there’s some great health systems out there. So I don’t want to paint it with a broad brush either. But you know, when all we see is the bad coming in sometimes, it’s hard to give them the benefit of the doubt.
– No, no, no I hear you. And you know you and I are in the same boat. I get thousands of messages now per day from people in terrible situations and these are, you can tell just how they’re writing. These are passionate physicians, nurses, respiratory, people on the front lines who are getting abused and look, if they’re misperceiving the abuse. In other words, if like, no these are guys are working really hard to help them, then the communication is lacking. Because they’re not getting the message, which means that’s bad leadership. That’s an organization that is not integrated with a team where it’s co-led by every single member of the team, which is an organic management style that we oughta have in healthcare. ‘Cause healthcare, especially when we talk about 3.0 is everybody practicing at the top of their game. Co-leading an organization. Right now it’s this dominator hierarchy of some business people who are tasked with making money and again it’s not their fault. They’re doing what they’re incentivized to do. They’re actually good people in a bad incentive system. So, I think what you guys are doing and it looks like all the fee structure and everything is on your website so people can go poking through the website and see what is going on there. So we talked about noncompetes, we talked about what’s going on with COVID, these violations of contract. What do you think, so the longer term issue is free agency for nurses as well. For every member of the staff, that liquid workforce so that you go where your fit is. ‘Cause there’s no one-size-fits-all and that’s a crucial piece as well. So hopefully your efforts will help to sort of open the door for that for a lot of people.
– Yeah, no, we totally agree and the hierarchy you talked about. Everybody’s seen the charge about the ramp up in administration versus the ramp up in providers. You know that structure changes and I think you’d have better communication. You would haven’t to hop through eight people, you’d hop through one person, right, to get your information you need to make the request you need. And so I couldn’t agree more. I mean it starts with the positions and it trickles all the way down to the nursing staff and communication is obviously key.
– Yeah, I’m with you 1000%. Any other words of advice, we’ll share all your links and things like that for people going through this difficult time.
– No, I just want to say thanks and we appreciate you, who continue to push that message because we do think if we put the physicians back in control, everyone is gonna see better outcomes, patients and administration. I mean I think there’s not gonna be a shortage of revenue and people that need to be seen. So it can work, it’s just it needs to work in a different way.
– I’m with you 1000%. Every single incentive needs to change. We need to grow the pie instead of trying to grab pieces of a shrinking pie. We need to support, love and care for each other as part of this organic system that is healthcare. Instead of this assembly line that is health 2.0 and this matrix that we’re living in. And it will happen and COVID will actually be the catalyst, I’m convinced of it if we don’t drop the ball, which is why I’m really glad to have you on the show. Kyle Claussen thank you, Resolve.net, we’ll put up links. I want to thank everybody in the Z-Pack who’s working on the front lines right now, despite all the uncertainty, all the fear, all the financial turmoil that everybody’s going through right now. It’s unimaginable what your asked to do and the fact that you do it every single day despite all the odds, we will all never forget this. All right guys. So, do me a favor, share this video, check out the links and we out peace. Stay safe.
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