By Dr. Gretchen Green, Guest Writer
Many physicians see patients and perform procedures and then get paid every few weeks, often without having had direct conversations with patients about cost. We may have a vague conversation about patients contacting their insurance companies or speaking with our billing office to get details, but many physicians may have little to no involvement in day-to-day billing.
In contrast, as an expert witness reviewing medical malpractice cases for attorneys, fees are often the first topic of conversation after discussing your clinical credentials and ensuring that no conflict of interest exists. No wonder many physicians who are new to expert work are taken aback at how immediately and transparently the issue of money comes up. For some, this reinforces a stereotype that expert work is "just being a hired gun."
But when you go to a restaurant, the prices are on the menu when you are seated at the table. You have a choice of what to order based on your budget and what kind of meal you plan to have. You pay the bill at the end of the meal and maybe take your leftovers home. For some fancy establishments or special occasions, you might even pay when you make the initial reservation.
Expert work is no different. And if you have plans to do almost any other "side gig" where you spend your otherwise free time working, you'll need to follow some steps in order to get paid. Otherwise, there were innumerable non-work activities you could have done with that time for free instead.
How to NOT Get Paid as an Expert Witness
If you don't bill, you won't get paid. And if you don't have a consistent system of invoicing, depositing, and tracking the money, you will have no idea how your business is performing, how to pay estimated taxes, or how to maximize the benefits of side income. This is where I see physicians and other clinicians have the most trouble when they are learning how to launch and build an expert witness business.
This post is focused on expert witness work, but almost anyone with a side gig will benefit from learning these transferable skills. This is great news for people like us who are basically professional students. We're really good at learning new skills. Remember that when you're facing the temporary challenge that always comes from learning something new and unfamiliar, THAT process is one we know very well.
The Biggest Billing Mistakes Experts Make
The biggest mistakes experts make are:
- Charging too little
- Not having clear language regarding fees in their expert contract
- Invoicing too infrequently and submitting large bills late
- Mixing personal and business income/expenses
- Failing to take advantage of other financial benefits of a side gig
More information here:
7 Physician Side Gigs for Extra Income
Non-Clinical Work for Physicians
Time Is Money
It amazes me that so many physicians devalue their time, thinking they need to "start low and work up" to an actual market rate of $500-$900 hourly for most physician experts. (Notice you are called an expert—there is no "amateur witness!") Undercharging can be one of your costliest mistakes, because you tend to repeat the pattern over months to years, compounding the losses. (Does this make you want to review or renegotiate your employment contract? Make sure you get a great lawyer to help you negotiate your next job contract.)
The initial conversation with an attorney who might hire you as an expert witness often takes physicians aback because they don't understand why an attorney is asking about a "fee schedule," and they might feel uncomfortable talking about money at the beginning of the business relationship. "Fee schedule" is just the term attorneys use to ask how much you charge for your time—and it's business as usual for them to ask this right away. That's because attorneys have to consider the math of each case. They have to understand the costs of pursuing a case and the possibilities for financial recovery for the plaintiff (or costs to the defendant). They are running a business, too.
Your fee schedule generally consists of 1) a retainer (money paid up front, usually nonrefundable, often covering 3-5 hours of work), 2) your hourly rate paid after the retainer is used up, 3) rates for deposition and trial, and 4) miscellaneous fees specified in your contract. This can be stated as simply as, "I charge a nonrefundable $3,500 retainer covering the first five hours of work at a subsequent $700/hour rate." Your contract will detail the rest.
A Contract Is Just Clear Communication
A contract is a legal document that essentially captures a conversation. A good contract will cover the actions of both parties, consider possible outcomes, and cover worst-case scenarios. Although beyond the scope of this post (and note I am not a lawyer, financial expert, etc.), it is well worth it to hire an attorney to write your expert (or other business) contract.
In the internet age, there are contract templates available from various online sources, and it is up to you to consider how you make the best use of one. It may serve as a starting point or a checklist to make sure your own contract covers the bases, but ultimately, a contract is a custom document that needs to address your personal circumstances. For physicians, some issues you'll need to consider beyond hourly rates are 1) cancellation policies so you don't lose clinical income from a deposition cancellation, 2) prepayment requirements for deposition/trial and written reports, and 3) guidelines regarding how often you invoice and consequences for non-payment.
More information here:
How Being an Expert Witness Can Make You a Better Doctor
Invoicing Causes Incoming Money
An invoice is a written communication saying one party owes money for work performed. The first time I served as an expert, the law firm asked me to provide a bill, and it felt like it would have been easier for me to attempt a laparoscopic cholecystectomy than actually write a bill (remember, I'm a radiologist, not a surgeon).
Now I know an invoice can be as simple as a letter—include your address, name/entity to whom funds should be paid, the client's name and address, and the dates and hours worked per day with a general description (i.e. "telephone conference" or "case review"). Many experts bill hourly, subdivided into quarter-hour increments. For example: "1/1/23 – 1.25h John Doe case review." Add up the total and invoice monthly when a case has activity. Communicate with the attorney to be clear about potential large bills, such as writing a report or reviewing long medical records. Avoid providing surprise bills months later.
Software and accounting programs like QuickBooks Online and FreshBooks make invoicing and tracking very easy and professional. Some allow direct payments as well, although many law offices still write paper checks and send them in the mail.
Separate Business from Personal Income and Expenses
WCI fans have access to many great posts highlighting the benefits of keeping business income and expenses separate from personal accounts. Yet many physicians quickly get overwhelmed by the thought of "forming a business" for expert work or other income. Remember until recently, most physicians owned their own practices, and it has long been expected that we had basic business acumen.
It's easier than ever to get an EIN (a Social Security number for your business), a business checking/savings account (mine even link to my personal account at the same credit union for ease of transfers and customer service), and software to help you keep track of the bottom line. It is so rewarding to see your hard work pay off and watch your business income grow over time. It may inspire you to do other things you didn't know how to do before and increase your confidence in other financial areas.
More information here:
Can You Lease Your Car to Your Business?
Make the Most of the Money
You don't have to take advantage of the tax benefits of a side business, like additional deductions for business expenses, another opportunity to fund a separate retirement account, or even to employ your children so they can start their own Roth IRAs. But ask yourself: why wouldn't you? By proactively planning and strategizing tax and other financial benefits of starting a business, you will put yourself in the financial driver's seat and change everything else you do for the better.
Students in my course, Expert Witness Startup School, have made six-figure side incomes during their first year serving as experts, and some have stopped taking night and weekend calls to spend time on their own health and well-being and be with their families.
Whether you choose to serve as an expert witness or another "side gig" business, you can learn the skills needed to put your knowledge to work in a new way—for the benefit of your clients, your own finances, and ultimately your patients.
Interested in learning more about becoming an expert witness? Sign up for Gretchen's Expert Witness Startup School from now until January 30!
Was it difficult for you to set fee schedules and write invoices for your side gigs? If so, how did you manage it? Did you make other financial mistakes in starting a new side business? Comment below!
[Editor's Note: Dr. Gretchen Green is a radiologist with a thriving expert witness business and the creator of Expert Witness Startup School, a comprehensive how-to online course that teaches physicians how to launch and build an expert witness practice. WCI has an affiliate relationship with Expert Witness Startup School. However, this is not a sponsored post. This article was submitted and approved according to our Guest Post Policy.]
The post How to Actually Get Paid as an Expert Witness (or Any Other Side Gig) appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.
Be sure to Refinance Your Student Loans, sign-up for our Online Courses, and listen to the WCI Podcast!
Unsubscribe from these daily blog post emails
Subscribe to our monthly newsletter
Subscribe to the weekly blog post summaries
Subscribe to our daily blog post emails
Find out about real estate opportunities
Stay informed about events and conferences
If you NEVER want ANY emails from us again, you can unsubscribe from EVERYTHING | Update your email address by clicking here
White Coat Investor | P.O. Box 520421, Salt Lake City, Utah 84152
No comments:
Post a Comment
Keep a civil tongue.