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Minimum Income Guarantee

As admin for The Australian GP Job Portal I see lot of posts offering this.

I think it is fair to say that there is confusion as to what it normally means and whether it is a good thing to have in a contract.

Here I try to demystify this clause. IMGs in particular may not be familiar with it.

In short, it means what it says on the tin. The surgery is guaranteeing to pay you the amount quoted as a minimum amount/hr for the duration specified whether or not you generate that much income for the clinic

This is usually exclusive of GST and the usual service fee. 
If your MIG is $125/hr and you work 8hrs/day, 5 days a week, your income will be:

$125 x 8 hrs x 5 days = $5000 + $500 GST 

Ignore the GST as the taxman will take that away.

So, even if you see no patients, you are guaranteed this amount contractually.

It is very tempting and when comparing 2 or more offers, hard to look past.

$150/hr is a lot more than $120, right?

4 or 6 months is a lot longer than 6 weeks or 3 months. A $20 difference per hour over 13-26 weeks can add up (that is $10,400-$20,800)

This is wonderful for planning, particularly if you are relocating. If you are an IMG this can be a godsend as you basically get paid to learn the ropes and the complexities of a fee for service model and the Medicare system.

So, are there any pitfalls?
As usual, the Devil’s in the details. 
What you need to ask yourself is this:
Why am I being offered a MIG?

This can be very hard to find out, unfortunately. This is especially true if you’re dealing with a recruitment agent or overseas during the negotiating process.

1. The surgery is so confident that you’ll quickly be billing more than the MIG, that they’re happy to offer you this guarantee to sweeten the deal and calm your nerves.

2. The surgery is experiencing a period of growth and all available Drs are full. They are hopeful you will be too. They have done their research and are able to tell you how many patients they have on their books, what the waiting times are and how many patients are being turned away. They are happy for you to speak to existing and/or departing Drs.

3. The surgery is losing a popular Dr. This Dr was very busy and it is their expectation that soon you will be too. They are open and transparent about departing Drs income, hours and scope of practice. The MIG period will cover the transition phase. The departing Dr may even do a formal handover of patients to you.

So, when might a MIG not be anything but good?

When you don’t do your due diligence. 
When the surgery has no patient base or when the owner wants to expand or it has just opened. Owners want a Dr in every room, a bum on every chair.

This is unfortunately the norm, not the exception, especially in Metros.

All major metros in Australia, Sydney being the worst, are over serviced. So, making the case for pent up demand is hard. Looking at the local distribution of surgeries is also little more than wetting your finger and waving it in the air. There is no capitation. Patients may live in Suburb A but have their regular GP in the CBD where they work. So, if you see a new housing estate coming up with no nearby GPs, it means diddly squat!

You will be enticed not only with a MIG but other goodies like:

1. Pharmacy/pathology on site (I go to my GP because they have a pathology on site, said no patient ever)

2. High footfall area. Like a shopping centre. Again, means little to nothing. Nobody goes to a shopping centre to see a GP. Patients will go to their GP even if they’re located in a shopping centre. The 2 are not even remotely the same.

3. Allied health on site. Again means little. Every suburb and every shopping centre in Australia has a physiotherapist, a sports physio, podiatrist, radiologist and pathologist. In a metro this means little. Most people after getting the referral will go to the most convenient location around their house or place of work. This may or may not be the Surgery. That this somehow will increase your patients list size is pure hokum.

As above, but worse. Maybe the area gained DPA status and the owner wants to ‘get in before it’s too late’ or new surgeries are opening up, so the idea is to out muscle them.

The most egregious of these situations is when what the surgery really needs is a locum but are unwilling to spend the $ needed for the right candidate. Maybe someone is going on a sabbatical or maternity leave. What happens when that person comes back? Will you have magically gained a few thousand patients in that period to sustain you both when that person returns. If yes, then why didn’t the surgery recruit earlier?

Be specially wary when in the above scenario the person going away is the owner and/or their partner is the practice manager.

Invariably, in these situations, once the person returns, you will be shafted. The MIG will have long expired and you will be facing a dwindling income.

Enter The Restraint of Trade Clause…

In my next instalment I tackle this derisible clause.

Till next time