The Business of Medicine: What They Didn't Teach You in Fellowship

Crucial Non-Clinical Knowledge for a Successful Career

Dr Neeraj Manikath , claude.ai

Abstract

The transition from fellowship to independent practice represents a critical juncture where clinical excellence alone proves insufficient for career success. This review addresses the substantial gap in medical training regarding the business fundamentals of clinical practice. We examine four essential domains: the RVU-based compensation framework, contract negotiation principles, prior authorization workflow optimization, and strategic relationship-building for career advancement. Drawing from healthcare economics literature, practice management research, and career development studies, we provide actionable guidance for early-career internists navigating the complex intersection of clinical medicine and healthcare business operations.

Introduction

Medical training traditionally prioritizes clinical competence while systematically neglecting the business acumen required for sustainable practice. A 2019 survey published in Academic Medicine revealed that fewer than 15% of graduating fellows felt adequately prepared to understand their employment contracts, and only 8% reported training in healthcare reimbursement mechanics¹. This knowledge deficit creates vulnerability to unfavorable employment terms, suboptimal compensation, and career stagnation.

The modern healthcare landscape demands bilingual fluency—speaking both the language of medicine and business. This review synthesizes essential business knowledge into an accessible framework for internists entering independent practice, whether in academic medical centers or private practice settings.

Understanding RVUs, Coding, and Billing: How Your Work Is Quantified and Compensated

The RVU Framework

The Relative Value Unit (RVU) system, established by the Centers for Medicare & Medicaid Services (CMS) through the Resource-Based Relative Value Scale (RBRVS), represents the lingua franca of physician compensation². Each RVU comprises three components:

Work RVU (wRVU): Quantifies physician time, skill, and intensity
Practice Expense RVU: Covers overhead costs (staff, equipment, supplies)
Malpractice RVU: Reflects liability insurance costs

The conversion factor (currently $33.29 for 2024) translates RVUs into Medicare reimbursement. Commercial payers typically negotiate rates as multiples of Medicare rates (commonly 120-250%).

Pearl: Your wRVU production directly impacts compensation in most models. The Medical Group Management Association (MGMA) reports median annual wRVU production for general internists at approximately 4,200, with significant variation by practice setting³.

Coding Fundamentals

Current Procedural Terminology (CPT) codes define billable services. For outpatient evaluation and management (E/M), the 2021 guidelines simplified coding by emphasizing medical decision-making (MDM) complexity or total time⁴.

Office Visit Coding (2021 Guidelines):

99202/99212: Straightforward MDM (30/20 minutes)
99203/99213: Low complexity MDM (45/30 minutes)
99204/99214: Moderate complexity MDM (60/40 minutes)
99205/99215: High complexity MDM (75/55 minutes)

MDM complexity incorporates:

Number and complexity of problems addressed
Amount and complexity of data reviewed
Risk of complications, morbidity, or mortality

Hack: Document chronic disease management comprehensively. A patient with diabetes, hypertension, and hyperlipidemia typically qualifies for 99214 when you address multiple conditions with prescription management and data review (labs, imaging). Don't "downcode" due to time efficiency.

Oyster: Undercoding represents the most common documentation error among early-career physicians. A 2018 JAMA Internal Medicine study found that internists undercoded 15-20% of visits compared to appropriate documentation⁵.

Billing Modifiers and Add-Ons

Strategic use of modifiers increases appropriate reimbursement:

Prolonged Services (99417): Additional 15 minutes beyond base code threshold (stackable)
Chronic Care Management (99490): 20 minutes/month of non-face-to-face care for ≥2 chronic conditions
Transitional Care Management (99495/99496): Post-discharge visit within 7-14 days
Advanced Care Planning (99497/99498): Goals-of-care discussions

Pearl: Transitional care management codes (99495: $170, 99496: $237 Medicare rates) require phone contact within 2 days and face-to-face visit within specified timeframes but generate substantial RVUs for work already performed⁶.

Academic vs. Private Practice Compensation Models

Academic Medicine:

Typically base salary plus wRVU incentive (often 50-70% base, 30-50% productivity)
Lower per-wRVU rates ($40-55/wRVU) but with benefits like malpractice coverage, CME allowances
Often includes protected research/teaching time in target wRVUs

Private Practice:

Higher wRVU compensation rates ($55-75/wRVU)
May require productivity thresholds before incentive payments
Greater overhead transparency with eat-what-you-kill models

Hack: Calculate your effective hourly rate by dividing annual compensation by clinical hours worked. This reveals whether "productivity bonuses" actually compensate for additional time invested.

How to Read a Contract: Key Clauses to Look for in Your First Academic or Practice Appointment

Essential Contract Components

Employment agreements typically span 20-40 pages of dense legal language. Focus on these critical provisions:

1. Compensation Structure

Examine:

Base salary and escalation schedule
wRVU threshold for incentive compensation
Quality metric bonuses (often 5-10% of total compensation)
Call pay and stipends

Red Flag: Compensation "up to" a certain amount suggests heavy productivity requirements. Request historical wRVU data for physicians in similar roles.

Pearl: Negotiate signing bonuses ($15,000-$30,000 typical for general internal medicine) and student loan repayment rather than base salary increases—they don't establish precedent for future raises⁷.

2. Restrictive Covenants

Non-Compete Clauses: Specify geographic radius (commonly 5-15 miles) and duration (typically 1-2 years) preventing practice after departure.

Oyster: Non-competes are unenforceable in California, Colorado, North Dakota, and Oklahoma, and face increasing scrutiny in other jurisdictions. The FTC proposed a nationwide ban in 2023, though implementation remains uncertain⁸.

Negotiation Strategy: Push for:

Narrower geographic radius (particularly in urban areas)
Shorter duration (12 months vs. 24 months)
Specialty-specific restrictions rather than blanket internal medicine prohibition
"Blue pencil" language allowing courts to modify unreasonable terms

3. Termination Provisions

Without Cause: Typically 60-90 days notice by either party

With Cause: Immediate termination for license loss, fraud, or "material breach"

Pearl: Negotiate specific definitions of "cause" and require written notice with cure periods (30-60 days to remediate alleged breaches) before termination.

Critical: Understand tail coverage for claims-made malpractice policies. Tail insurance (covering claims filed after policy termination) costs 175-200% of final year premium—potentially $30,000-$50,000⁹.

4. Benefits Package

Comprehensively evaluate:

Health insurance (employer contribution percentage)
Retirement matching (typical 3-6% with 3-5 year vesting)
Malpractice coverage limits ($1M/$3M standard) and type (claims-made vs. occurrence)
CME allowance ($2,500-$5,000 annually) and time (5-7 days)
Paid time off (15-25 days typical, inclusive of CME)

Hack: Benefits often represent 25-35% of total compensation. A position offering $220,000 with full benefits may exceed $250,000 with minimal benefits when calculated comprehensively.

5. Intellectual Property and Outside Activities

Academic contracts frequently claim ownership of research, publications, and inventions developed during employment.

Negotiate:

Rights to prior inventions and research
Revenue-sharing for patentable discoveries
Freedom for outside consulting (typically 20% time allowed with advance approval)

The Review Process

Essential Steps:

Have an attorney review: Healthcare employment lawyers charge $1,500-$3,000 but identify problematic clauses worth tens of thousands¹⁰
Request comparison data: Ask for MGMA benchmark data for similar roles
Negotiate iteratively: Employers expect negotiation; initial offers rarely represent final terms
Document verbal promises: Ensure teaching loads, administrative support, and research time appear explicitly in writing

Pearl: Everything is negotiable until you sign. Afterward, modifications require employer magnanimity—a scarce resource.

The Nuts and Bolts of Prior Authorization: Developing Systems and Templates to Navigate This Bureaucratic Hurdle Efficiently

The Prior Authorization Landscape

Prior authorization (PA) requirements have expanded exponentially, with the American Medical Association reporting that 88% of physicians characterize PA burden as "high or extremely high"¹¹. The average physician completes 41 PAs weekly, consuming nearly 15 hours of staff time.

Strategic Approaches to PA Management

1. Know Your Formularies

Hack: Maintain a quick-reference guide of preferred agents by insurance tier:

Tier 1-2: Preferred generic and brand agents (minimal PA requirements)
Tier 3: Non-preferred brands (often requiring PA)
Specialty Tier: High-cost agents (always requiring PA)

Electronic prescribing platforms increasingly integrate formulary information at the point of prescribing, reducing downstream PA burden.

2. Create Standardized Templates

Develop diagnosis-specific PA templates addressing common criteria:

Template Elements:

Clinical indication: ICD-10 codes with specificity
Previous treatments: Failed therapies with dates, doses, duration
Supporting documentation: Relevant labs, imaging, specialist notes
Medical necessity justification: Evidence-based guidelines supporting request

Example Template (Biologic for Rheumatoid Arthritis):

Diagnosis: Seropositive rheumatoid arthritis (M05.79)
Failed DMARDs: Methotrexate 25mg weekly × 12 weeks (inadequate response), Sulfasalazine 3g daily × 8 weeks (discontinued for GI intolerance)
Supporting labs: RF 145 IU/mL (normal <14), anti-CCP >250 units (normal <20), CRP 4.2 mg/dL
Rationale: ACR guidelines recommend biologic DMARD after inadequate response to conventional DMARDs¹²

Pearl: Include guideline citations. Peer-to-peer conversations become unnecessary when documentation preemptively addresses denial rationales.

3. Leverage Staff Effectively

Delegation Framework:

Medical assistants: Initial PA form completion using templates
Nurses/mid-levels: Clinical documentation and peer-to-peer calls
Physicians: Final review and complex appeals

Track PA metrics monthly:

Approval rate by medication/procedure
Time to approval
Denial reasons

Hack: "Fail-first" requirements frustrate patients and physicians alike. Document contraindications or prior failures to required medications when legitimate, but recognize that attempting step therapy may ultimately prove faster than protracted appeals for some agents.

4. Master the Appeal Process

PA denials typically allow two appeal levels before external review.

First-Level Appeal Strategy:

Submit within specified timeframe (often 30 days)
Include new supporting documentation (specialist consultation, additional labs)
Cite medical literature and society guidelines explicitly
Request peer-to-peer conversation

Oyster: Denial overturn rates exceed 50% at first appeal when clinical documentation is comprehensive¹³. Persistence pays.

Second-Level/External Appeal: Involves independent physician reviewers. These favor plaintiffs—overturning denials in approximately 40% of cases¹⁴.

5. Understand Expedited Review

Urgent/Expedited PAs: Available when standard timeframes (typically 72 hours) could seriously jeopardize health. Decisions required within 24 hours.

Clinical Scenarios Warranting Expedited Review:

Cancer therapies
Post-surgical medications
Acute infectious diseases
Conditions with rapid deterioration risk

Pearl: Simply checking "expedited" without adequate justification invites denial. Document specific clinical deterioration risks.

Advocating for Reform

PA reform requires collective action. Support legislative efforts mandating:

"Gold-carding" exempting high-approval-rate physicians from PA requirements
Real-time PA determinations for specific medication classes
Annual PA rather than refill requirements for chronic stable conditions

The Improving Seniors' Timely Access to Care Act, introduced in Congress in 2023, addresses some Medicare Advantage PA abuses¹⁵.

Mentorship vs. Sponsorship: How to Build a Team of Advisors to Guide Your Career Advancement

Defining the Distinction

The terms "mentor" and "sponsor" are frequently conflated but represent distinct developmental relationships:

Mentorship: A developmental relationship where an experienced individual provides guidance, advice, and support to facilitate professional growth. Mentorship is advisory.

Sponsorship: An active relationship where a senior leader leverages their influence, networks, and political capital to create advancement opportunities. Sponsorship is promotional.

As Sylvia Ann Hewlett articulated in her seminal Harvard Business Review article: "Mentors advise, sponsors advocate"¹⁶.

Why Sponsorship Matters

Research consistently demonstrates that sponsorship, rather than mentorship alone, predicts career advancement. A 2019 JAMA study found that physicians with sponsors advanced to leadership positions at twice the rate of those with mentors only¹⁷.

Sponsors:

Advocate for promotions and opportunities
Nominate protégés for high-visibility assignments
Connect protégés to influential networks
Provide "air cover" during conflicts
Recommend protégés for external opportunities

Building Your Advisory Team

Pearl: Don't rely on a single advisor. Cultivate a constellation of relationships serving different functions:

1. Clinical Mentor

Role: Guides clinical decision-making, diagnostic reasoning, and patient management complexity

How to Find: Often emerges naturally from fellowship training. Maintain these relationships post-fellowship through case discussions and co-authorship.

2. Research/Academic Mentor

Role: Provides guidance on scholarly productivity, grant writing, and academic promotion

Critical for: Academic track physicians pursuing promotion

Hack: Research mentors need not be in your specialty. Successful investigators in any field can guide research infrastructure, manuscript development, and funding strategies.

3. Career Sponsor

Role: Actively promotes your advancement within organizational hierarchy

Identification Strategy: Sponsors typically occupy leadership positions 2-3 levels above your current role. They recognize your potential and willingly invest their reputation in your success.

Oyster: You cannot request sponsorship directly—it must be earned through demonstrated competence, reliability, and results. Deliver exceptionally on visible projects to capture potential sponsors' attention.

4. Peer Advisory Group

Role: Provides confidential sounding board for workplace challenges, negotiation strategies, and career decisions

Structure: 3-5 peers at similar career stages, meeting quarterly (virtually or in-person)

Pearl: Peer groups offer psychological safety that hierarchical relationships cannot. Vulnerabilities about clinical uncertainties, workplace conflicts, or contract concerns are best shared with peers.

Strategies for Cultivating Sponsorship

1. Demonstrate Consistent Excellence

Sponsors invest in "sure bets"—individuals whose success reflects well on sponsor judgment. Reliability trumps occasional brilliance.

2. Develop Visible Expertise

Establish recognized competence in a defined domain:

Quality improvement initiatives
Specific clinical niche
Medical education innovation
Healthcare policy

Hack: Volunteer for high-visibility committees (credentials, quality, utilization review). These positions provide exposure to organizational decision-makers while developing leadership skills.

3. Make Your Aspirations Known

Research by Herminia Ibarra demonstrates that many professionals, particularly women and underrepresented minorities, hesitate to express career ambitions explicitly¹⁸. Potential sponsors cannot advocate for goals they don't know exist.

Script: "I'm interested in developing leadership skills in [specific domain]. Would you be willing to advise me on opportunities that might help me build experience in this area?"

4. Reciprocate Value

Sponsorship isn't unidirectional. Identify ways to support sponsor objectives:

Serve on their committees
Contribute to their initiatives
Share relevant information or contacts
Represent them professionally in their absence

5. Expand Beyond Your Institution

External sponsors provide:

National visibility
Protection from local political dynamics
Broader opportunity awareness
Credibility enhancement

Cultivate external relationships through:

National committee service (ACP, specialty societies)
Conference presentations and networking
Social media engagement (particularly Twitter/X and LinkedIn for physicians)
Collaborative research

Addressing Sponsorship Gaps

Substantial literature documents sponsorship disparities affecting women and physicians from underrepresented backgrounds¹⁹. Structural barriers include:

Homophily bias (leaders sponsor those similar to themselves)
Limited access to informal networking
Stereotyping and affinity bias

Strategies for Overcoming Barriers:

Seek formal sponsorship programs: Many academic medical centers now implement structured sponsorship initiatives
Leverage affinity groups: Women in Medicine, LGBTQ+ physician organizations, and racial/ethnic medical associations provide networking and sponsorship opportunities
Request specific advocacy: When mentors praise your work, ask: "Would you be willing to recommend me for [specific opportunity]?"

When to Seek New Advisors

Productive advisory relationships evolve over career stages. Consider expanding your team when:

Your career trajectory shifts (academic to administrative, for example)
Geographic relocation limits in-person access
Advisor relationship becomes stagnant or non-responsive
You need expertise your current advisors lack

Pearl: Transitioning away from advisors should occur gracefully. Express gratitude for past support while noting your evolving needs. Maintain collegial relationships—today's mentor may become tomorrow's peer collaborator.

Conclusions and Key Takeaways

The business of medicine represents essential knowledge, not optional supplementation. Early investment in understanding compensation mechanics, contract negotiation, administrative workflow optimization, and strategic relationship-building yields career-long dividends.

Essential Pearls:

Track your wRVUs monthly: Understand your productivity trajectory relative to compensation thresholds and specialty benchmarks
Never sign a contract without legal review: The $2,500 investment prevents $25,000+ mistakes
Build PA systems proactively: Reactive approaches waste exponentially more time than preventive workflow design
Cultivate sponsors intentionally: Career advancement rarely occurs through merit alone; visibility and advocacy prove essential
Continuously update business knowledge: Healthcare economics, regulations, and payment models evolve constantly

The skills detailed in this review complement clinical excellence rather than compete with it. Mastery of medicine's business fundamentals enables physicians to practice sustainably, advocate effectively for patients, and advance professionally while maintaining the patient-centered focus that drew us to medicine initially.

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The author has no conflicts of interest to disclose.