Understanding Resident StipendsResolve Physician Agency

Understanding Resident Stipends

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While in training, physicians are typically living on a tight budget. Most will eventually earn well over $200k per year as attendings, but they are compensated with less than half that amount in residency. This knowledge, combined with a general shortage of physicians, has prompted more employers to entice trainees with resident stipends. Although these stipends can offer a huge financial boost to residents, it is important to understand exactly what accepting a stipend entails.

What is a resident stipend?

A resident stipend is a payment offered by a future employer to a physician trainee, usually distributed to the physician in monthly installments. In exchange, the physician agrees to work for the employer once they have completed training. Stipends provide financial aid to physicians at a time when they need it most, sometimes equating to an extra few thousand dollars per month.

A resident stipend acts as a sort of advance bonus used by employers to court physicians early in their careers. These stipends can be offered to residents at any point during training but are often focused on those in their third or fourth year.

What’s the catch?

If you accept a resident stipend, you will agree to a variety of terms and sign a contract. Not only are you committing to future employment, but you will also need to repay the stipend in some fashion later. Usually, the stipend is repaid by working for a number of years agreed upon in your contract, probably between two and five.

If you accept a stipend and later change your mind about working for the employer, or switch jobs before the repayment period is complete, your contract will specify the consequences. In most cases, you will need to repay the remaining amount of your stipend. Unlike how the stipend was originally distributed to you, this could mean repaying the outstanding amount all at once. Employers will often want the lump sum repaid within a few months, and they may charge interest if the expected amount is not paid in time.

Understand the commitment

While the immediate benefits of a resident stipend are tempting to young physicians, the commitment should not be taken lightly. Especially if you are in your early years of residency, a lot can happen between that time and when you graduate. A stipend is useful to stabilize your finances, but it has the potential to place you in a worse financial situation if you default on the accompanying contract. If you remain committed to the agreement, you could still miss out on better employment offers that come along after you have agreed to the stipend.

It is also possible to accept a stipend without finalizing a full employment contract. You need to vet your future job and employer as well as possible, but it can be difficult to know exactly what you are getting into when so much can change in a few years and an actual employment contract is not in place. Even if you do sign a full contract, the compensation and other terms of the agreement could become outdated by the time you start work.

Making the decision

It is hard to definitively say whether you should accept a resident stipend or not. The decision depends on your unique circumstances and the risks you are willing to take. However, there are a few steps you can take to mitigate those risks.

If you are offered a stipend at any point, be sure to review the contract fully and possibly negotiate repayment or exit terms. Thoroughly evaluate the employer as well, so you have a good understanding of your future workplace, colleagues, scheduling, and more. Also make sure you are comfortable with the geographic area and commitment to it for years to come. Stipends most often work out well for physicians who intend to stay in their hometown or another location with which they are already familiar. If you are relatively sure you will want to be in a specific location, a stipend could be an option to consider.

Keep in mind that you are giving up negotiating power when taking a stipend. You will have less leverage if you need to negotiate your actual employment contract in the future. Therefore, it is best to get a full employment contract in place while accepting the stipend. Some aspects of the job could still change before you start work, but the employment contract should prevent major surprises like changes in salary, unexpected call hours, or a requirement to work multiple locations.

If you are considering a stipend offer or need to get out of a stipend agreement, Resolve can help. As the #1 rated physician contract review and negotiation firm in the nation, Resolve has the necessary experience to ensure you are treated fairly in your employment. Connect with an attorney who reviews and negotiates physician contracts every day. He or she will take your priorities into account, point out any concerning terms, and help you negotiate.