Making the transition from junior hospital doctor (JMO) to consultant, brings with it a host of new challenges. The exciting part about them is that they are challenges brought about by achieving the goal of becoming a specialist. You find that you are in much greater control of both your day to day working life and the direction of your career. Some of the bigger challenges are in areas you may not previously have given much thought to and can be very difficult to engage anyone about prior to becoming a consultant in the department. Your financial set up is often one of those areas.
As a junior hospital doctor you turned up for work as laid out in your roster and every 2 weeks the hospital deposited some money (hopefully the correct amount) into your account. It was taxed at source, superannuation was set aside for you and various other deductions that you may have nominated, such as salary packaging or salary sacrificing, were all calculated and handled for you. As a consultant, this may change significantly.
Firstly, your income stream expands. There is your primary public hospital appointment, either as a staff specialist or a visiting medical officer (VMO). Then there is the potential for a private hospital appointment. Third and possibly the position that gets you started, are the locum positions.
Public Hospital appointments
Public hospital appointments are usually as one of a staff specialist, a VMO or a locum. The staff specialist is employed on a fixed contract a bit like a JMO. He or she is paid an annual salary, spread out over the year in fortnightly or monthly sums. That salary is determined by the Staff Specialists Award, which is specific to each state (You can get a copy by contacting The Australian Salaried Medical Officers’ Federation – ASMOF at http://www.asmof.org.au/ or in New Zealand, The Association of Salaried Medical Specialists – ASMS at http://www.asms.org.nz/). The salary is fixed, so whether you spend most of your time rushing from bed to bed preventing disasters at all hours of the day and night, or breezing in and out of the unit as the mood takes you, the amount deposited in your account will be the same. (This can be quite liberating as financial concerns do not influence the decision process when managing a patient.) It gets a little more complicated than that depending on your level and seniority.
The staff specialist
The staff specialist’s salary increases every year for the first 6 years until he or she is eligible to be nominated for a senior staff specialist position from the 6th year of employment. From then on, the salary only increases with CPI rates and wage negotiation through industrial relations; e.g. AMA, ASMOF. You don’t always start as a Year 1 staff specialist, depending on your background. If you have another specialist qualification, or have been working as a specialist at another institution, you can negotiate to start at a more senior level; e.g. Year 2 or 3. It is worth discussion this with your director at the time of your interview, or shortly thereafter.
The other element that influences a staffie’s salary is his or her Level. A staffie’s Level does not reflect experience or seniority. It reflects his or her income stream. It is something that the staff specialist can nominate once every year, coming up to June and is determined by the balance of public and private practice within the unit that they are employed. In a public hospital, some patients may elect to be admitted as a private patient, giving them certain choices, such as who will perform their operation or access to a single room. A Level 1 staffie has no private income from patients admitted privately; their salary is independent of the public-private mix. The higher the level that a staffie nominates (Level 1 – 5) the greater the proportion of the private billings that they can draw on for income. However, as with everything in life, there is a trade-off.
A Level 1 staff specialist has no drawing rights on private billings generated by the department. However, they do receive the maximum private practice allowance (a form of compensation for having no private income within that hospital). This allowance gets smaller the higher the Level that the staffie nominates for and it disappears for Levels 4 and 5. A Level 1 staffie can also avail of the maximum amount of the Training, Education and Study Leave (TESL) fund, which can be used to pay for conferences, including travel, registration and daily living (per diem) costs and is worth up to a maximum of AU$29,400 per year, accrued to a maximum of 2 years (i.e. AU$58,800). Level 2 – 5 staffies get a decreasing entitlement, which is worked out at local level by the No. 2 Account committee at your hospital. If the private turn-over in your department is low, opting for Level 1 or 2 may be the best financial option. It is also a recommended option for the first 6 – 12 months for a staff specialist who has just started at a unit that is run as a partnership or co-operative, as they will not have built up a private billing account.
As the staff specialist’s Level increases, the salary that he or she is paid by the hospital for their public commitment at Level 5 reduces, as it is expected that the deficit will be made up for and possibly exceeded by the billing of private patients. The hospital bills these patients, which is paid into the Number 1 Account. The hospital then makes deductions from this account to pay for the use of the hospital’s facilities by the consultants and the balance is placed into the No. 2 Account. It is from this account that consultants are paid for managing private patients. Depending on how the financial structure of the department is set up (e.g individual specialist, co-operative, partnership), it is also the account from which funds are drawn to cover conference expenses of individual consultants, or to purchase a piece of equipment agreed upon by the group, such as an ultrasound machine. Additionally, if the department bills private patients as a partnership or co-operative, all of the consultants who are part of that partnership must bill at the same rates, as agreed upon by the group. One member of the group cannot suddnely decide to start adding a gap fee.
The higher Levels also get a proportionately lesser Private Practice Allowance and TESL allowance. The overall salary is usually progressively better than a lower Level, but only as long as the private turn-over is increasingly higher. Given that the TESL allowance diminishes with an increasing Level and may cease altogether, depending on local agreement, you might find that you have to fund all conference attendance out of your own pocket.
It can be tricky deciding which is the best option for you and, as your needs and practice change over time, you may need to review and change your choice. The easiest place to start is to discuss it with your colleagues in your department, as they will generally be au fait with the benefits and pitfalls of their particular department and administrative body. If everyone else is on a Level 4, then that is probably going to be your best option too.
The visiting medical officer (VMO)
The VMO is employed under contract either on a sessional or fee for service basis.
Under a sessional contract, the VMO is paid an hourly wage, similar to how JMOs are paid. This means having to keep a record of your working hours, because in addition to your rostered hours, you will need to enter a claim for any overtime, after hours work or call-backs on an appropriate timesheet. Also unlike a staff specialist, you will get loading for working out of hours, on weekends and over public holidays. This loading is state award specific.
A fee for service contract is exactly that. The VMO records every item of care provided, from duration and type of consult to diagnostic and therapeutic interventions and generates an invoice based usually on the Medicare service fee schedule, which is then submitted to the hospital administration for processing and payment. It involves the most work and most VMOs working this way will employ some form of personal assistant or practice manager to keep track of accounts and business.
ACT VMO information http://www.health.act.gov.au/c/health?a=sp&pid=1067475274
NSW VMO information http://www.health.nsw.gov.au/jobs/conditions/classifications/visitingmedicalofficer.asp
QLD VMO information http://www.health.qld.gov.au/vmo/
SA VMO information http://www.legislation.sa.gov.au/LZ/C/A/SUPERANNUATION%20(VISITING%20MEDICAL%20OFFICERS)%20ACT%201993/1999.12.22_(1993.04.01)/1993.30.PDF
Tasmania VMO information http://www.dhhs.tas.gov.au/careers/working_for_dhhs/salaries__and__benefits_150_overview/salary_rates
NT VMO information http://www.ocpe.nt.gov.au/__data/assets/pdf_file/0009/33579/MO-2010-2013-EA.pdf
VIC VMO information http://www.health.vic.gov.au/hospitalcirculars/circ00/attach1.doc
WA VMO information http://www.health.wa.gov.au/awardsandagreements/#DR
New Zealand: The Association of Salaried Medical Specialists (ASMS) http://www.asms.org.nz/
The appointing hospital may pay a retainer in recognition of the service provided and this is usually inclusive of any on-call commitment and may be negotiable. Some private hospitals will bill on behalf of the specialist and pass the billings on to the specialist after deducting an administrative fee. Otherwise, the specialist bills patients directly for services rendered. This can be quite daunting for several reasons.
Estimating the worth of your service can be uncomfortable. Largely, this is covered by the Medicare Schedule of Benefits (http://www.medicareaustralia.gov.au/provider/medicare/mbs.jsp), where there is an agreed fee for almost every medical (in the broadest sense) service and intervention. However, it becomes trickier if you decide that you are going to charge a gap fee, which is entirely up to you. Secondly, most patients will have some form of private insurance and these companies may have their own schedule of fees. Additionally, these companies may have “no-gap” schemes, whereby if you agree not to charge their clients a gap fee, they will increase the amount payable for each item above the usual fee. This can be quite good as it often also makes for a more streamlined billing system as you bill the insurance company on the patient’s behalf. The company sorts out the Medicare portion and then settles the remainder of the bill. There is less chance of a bill going unpaid, reducing the hassle of having to chase up unpaid accounts, and it usually feels easier to bill a company whose job it is to pay medical bills than a patient, or worse a patient’s account.
Next, in order to bill patients, your details need to be lodged with all of the medical insurers, including all of the private companies, the Department of Veterans’ Affairs and the relevant state Work Cover Authority. This involves a lot of up front work to get established and is worth starting several months before you intend to commence work.
Third, simply keeping track of which patients have been billed and for what and of those, which patients’ accounts have been paid in full or partially, can consume hours and days of your non-clinical time. You need good records when it comes to tax time, as you need to be able to estimate your income and pay the appropriate tax in order to avoid a large bill at the end of the financial year.
Finally, how you bill differs depending on whether you are billing a patient, a hospital or some other third party agency (e.g. an insurance company for a report provided). In general, patients are billed GST free, as it is regarded as an essential service. You will, however, be required to charge GST on invoices issued to hospitals and third parties. For more information on this, read the article on Taxation.
So if you are feeling a little overwhelmed at the moment, don’t panic. Most people are not aware of all of this when they start off and the majority still manage to stumble through it. If you are financially inclined you can do it yourself, perhaps with the aid of a piece of good accounting software or a decent spreadsheet. Most eventually crumble and opt for the advice of their colleagues who tell them to hire a practice manager. The fee might sound stiff (anywhere from 6 – 15% of gross earnings), but the benefits in terms of time freed up to engage in personal interests, not having to worry about billing while managing a patient and the fact that a proportion of those fees are tax deductible is usually worth it; but shop around first and talk to your consultant colleagues.
Many specialists have worked as locums at some stage in their careers, often during their JMO years, so the set up is not too alien. You can either engage directly with a hospital’s administrative department and work to a negotiated contract or as a fee for service. This may work well if you want to locum at a particular hospital with a view to securing a more permanent position in the future.
Alternatively, you can go via a locum agency which can source jobs based on your preferences, keep tabs on the locum market and resolve issues such as non payment of dues by a hospital, but are less likely to negotiate a wage on your behalf if it means losing the contract, as they will subsequently charge the hospital a locum-finders fee for securing someone to fill the gap in the roster.
Though the financial aspects of your chosen career are a part of your training that are largely not spoken about, they will become a major facet of your career. So, while you may not have had cause to think about your income prior to becoming a specialist, other than chasing up admin for failing to pay for that 2 hours of overtime that you worked 3 months ago, it is worth putting some thought into it now.