Key Takeaways

  • Hospitalist contracts vary by employment model, such as employee vs. independent contractor.
  • Key clauses include malpractice insurance, non-competes, termination terms, and compensation structures.
  • Compensation often involves base pay, RVUs, shift-based pay, and bonus incentives tied to performance or quality metrics.
  • Independent contractor (IC) status provides tax and autonomy benefits but also shifts liability and administrative responsibilities.
  • Facility-specific details such as onboarding, administrative duties, and expectations for interdisciplinary collaboration should be addressed in the contract.
  • Contracts should be reviewed for compliance with Stark Law, Anti-Kickback Statute, and fair market value assessments.
  • Always clarify responsibilities related to EMR documentation, committee involvement, and cross-coverage expectations.

Unique Aspects of a Hospitalist Contract

As a relatively new position in medicine, hospitalists play an important role in dealing with acute cases that demand immediate, round-the-clock attention. Hospitalists usually have a unique employment contract, so there are a few key aspects to consider when negotiating and renewing a hospitalist contract.

  • Work schedule and time off. Hospitalists usually work in atypical shifts, such as working for seven days and then off for seven days. When calculating an hourly total, hospitalists may end up working more than physicians with more common schedules do, since they might be expected to cover a 24-hour shift.
  • Productivity. Hospitalist contracts must have clearly defined guidelines pertaining to productivity and should provide an idea of the maximum and minimum numbers of patients they are expected to see. One way to measure productivity is by paying hospitalists according to relative value units (RVUs) instead of hours worked.
  • Non-compete clause. Hospitalists can also work in an outpatient or clinical environment; thus, healthcare attorneys should review any non-compete clauses to determine whether an outpatient position would violate the contract.

Employment Models and Their Contractual Impact

Hospitalist contracts can differ significantly depending on whether the physician is hired as an employee or an independent contractor. Each model carries unique contractual obligations and protections.

  • Employee Contracts typically include benefits such as health insurance, paid time off, and retirement plans. They often come with structured schedules and employer-covered malpractice insurance.
  • Independent Contractor Agreements (ICs) offer more flexibility and higher per-shift pay but place the burden of securing benefits, insurance, and retirement planning on the physician. ICs are also responsible for their own tax filings and business expenses.

Understanding your employment status is critical. For example, ICs may enjoy tax deductions but must cover their own "tail" malpractice insurance and often lack institutional support for credentialing or CME reimbursements​.

Contractual Issues

When it comes to hospitalist contracts, you should remember a few important pieces of information.

  • Understand how your pay is calculated. You should figure out whether payment is based on productivity, shift worked, or another option, and make certain that base pay and any information regarding bonuses or raises is included in your contract.
  • Determine whether there is enough work to support your salary expectations.
  • Know your malpractice insurance. Typically, there are two types of policies: claims made and per occurrence. If you have a claims-made policy, make sure you negotiate for your employer to cover the "tail" insurance so that, if you leave, you have minimal out-of-pocket costs.
  • Have work expectations spelled out. This inclusion makes sure that you can sustain a quality work-life balance.
  • Be aware of what happens with upfront money. If you receive a sign-on bonus or tuition reimbursement, for instance, ensure that this money is forgiven at a prorated amount of the lump sum over the course of your contract.
  • Include information about termination and term. Insurance enrollment and hospital credentialing usually take up to three months, so it's best to avoid a situation in which your employer could terminate you without a 90-day notice, leaving you without income or causing you to have to live away from your family until you find another position.
  • State non-compete covenants. Typically defined by time and distance, make sure your covenants last no more than a year.
  • Review rules and regulations as well as medical staff bylaws. Read these documents before you sign the contract since they define your care and responsibilities.
  • Determine whether the environment will satisfy you. Talk with medical staff currently working at the facility to see whether the job will be a good fit for you.
  • Make sure the contract agreement captures your spirit. Double-check that every promise made during recruitment is included in the contract.

Administrative and Nonclinical Duties

Beyond clinical responsibilities, hospitalist contracts may include expectations for administrative participation:

  • Committee involvement (e.g., quality improvement or utilization review)
  • EMR documentation standards and timelines
  • Coverage for unassigned patients or cross-coverage between departments
  • Attendance at hospital meetings or leadership huddles

These obligations can affect work-life balance and productivity, so they should be discussed and detailed in the contract. If additional administrative work is expected, the contract should state whether it’s compensated separately.

Legal Compliance and Risk Management

Hospitalist contracts must comply with federal regulations like the Stark Law and Anti-Kickback Statute, which govern physician referrals and remuneration. Facilities must also ensure contracts reflect fair market value (FMV) to avoid regulatory scrutiny.

Key legal considerations include:

  • Compensation should be FMV and not linked to referral volume.
  • Written agreements should define services provided and be signed in advance of service delivery.
  • Auditable documentation should support all payments.

Legal non-compliance can expose both the physician and facility to penalties. It is advisable to have the agreement reviewed by a healthcare attorney to avoid these risks.

Compensation Structures and Incentive Models

Hospitalist compensation models can be complex. Contracts should clearly spell out:

  • Base Salary: A guaranteed minimum payment that provides income stability.
  • Shift-Based Pay: Compensation based on number and type of shifts worked, including day, night, and weekend differentials.
  • RVUs (Relative Value Units): Performance-based pay tied to the volume and intensity of services provided.
  • Quality-Based Incentives: Bonuses linked to patient outcomes, readmission rates, and satisfaction scores.

Some contracts also include performance metrics tied to hospital goals, such as length of stay targets or discharge planning efficiency. When evaluating a hospitalist contract, it’s essential to assess whether compensation aligns with expectations and whether there’s transparency in how bonuses are calculated​.

Contract Caveats for Hospitalists

When entering a contract, both parties should identify themselves. For instance, sometimes physicians believe they're contracting with another physician, but the agreement is actually with a corporation. Structuring healthcare industries limit liability, so it's important to know how the contracting entity operates.

Hospitalists should also know what the considerations of the contract are, including:

  • Compensation: bonuses, payment formulas, salary, and profit distributions.
  • Insurance: dental, disability, health, life, and vision.
  • Paid time off: illness, professional meetings, and vacation.
  • Retirement plans: 401(k) and profit-sharing plans.
  • Professional fees: continuing medical education, hospital privileges, and medical licenses.
  • Malpractice insurance and tail coverage.

When it comes to a legally binding contract, each party must acquire an obligation in exchange for consideration. Most contracts fail to have enough information about obligations, but some parties include provisions that impose obligations that are spelled out in other documents. This is problematic because courts will enforce obligations imposed by other documents, even if a party didn't have the document at the time they signed the contract.

Unless stated by law or contract, parties usually have no further obligations to one another upon reasonable termination. Most states presume employment is at will, which means either party can terminate employment at any time without notice for a lawful reason.

Hospitalists should also understand remedies, which define the recourse that is available when a party breaches an agreement. There are three basic forms of remedies:

  • Compensatory damages: monetary awards to compensate an injured party for loss.
  • Liquidated damages: monetary awards to compensate a party for an agreed-upon loss.
  • Equitable relief: non-monetary remedies such as an injunction.

Independent Contractor Considerations

Physicians working as independent contractors should assess the following before signing:

  • Tax Responsibilities: You’ll need to manage quarterly estimated taxes and keep records for deductions like CME, travel, and business expenses.
  • Liability Insurance: Unlike employees, ICs must typically purchase their own malpractice and tail coverage.
  • Business Setup: You may need to form an LLC or S Corp for liability and tax advantages.
  • Credentialing and Billing: ICs often need to handle their own hospital credentialing and payer enrollment, which can delay income if not done in advance.

While IC agreements offer autonomy and earning potential, they also introduce risk and complexity. Physicians should weigh these trade-offs and seek legal counsel where needed​.

Frequently Asked Questions

  1. What is a hospitalist contract?
    A hospitalist contract is a legal agreement that outlines the terms of employment for a hospital-based physician, including compensation, schedule, benefits, and duties.
  2. What should be included in a hospitalist contract?
    Key elements include compensation structure, termination clauses, malpractice insurance, work schedule, non-compete clauses, and performance expectations.
  3. Are hospitalists usually employees or independent contractors?
    Hospitalists can be either, but each arrangement carries different legal, financial, and administrative implications.
  4. What is RVU-based compensation in a hospitalist contract?
    RVU-based pay compensates physicians based on the value of services rendered, often encouraging productivity and efficiency.
  5. Can I negotiate a hospitalist contract?
    Yes. Physicians can and should negotiate terms, particularly around compensation, termination notice, call expectations, and malpractice coverage. Consulting a healthcare attorney is recommended.

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