When negotiating physician employment contracts, it is vital and to your significant benefit that you accept a fixed compensation that is comparable and within the range of other professionals with your same skill and experience in your locality. 

The Basic Components of Physician Employment Contracts

While the amount of your fixed earnings stated in an agreement carries significance, there are a few other essential elements that your employment contract should include:

  • Restrictive covenants
  • Terms and termination provisions
  • Benefits 
  • Scheduling expectations

It is worthwhile to look at survey reports before accepting the proposed payment amount. Such statements like that published by Merritt Hawkins can provide insight into what the average compensation is for other physicians in your region. You can also reach out to colleagues who are employed in practice situations like yours and find out what they are receiving for salary.

Essential Guarantees that Come with Physician Employment Contracts

You can expect to be compensated at your base salary for awhile without the need for adjustment concerns. Only physicians who are fresh out of training may experience shortened time with the fixed rate, which could be only a single year. If you are a doctor joining a health system that gets linked to the sale of a practice, it might be possible to negotiate an extended period from three to five years where you have a guarantee of a base salary.

Your agreement should state if there are metrics or particular activities, such as cost, quality, or productivity to name a few, that can have an impact on your earnings.

If the contract does not explain those special requirements, then there should be a documented explanation of any policy that exists. This written document should apply to every physician working within the same situation and not a discretionary action administered by an employer.

Why Does Knowing How Your Data Gets Collected Matter?

Make sure you have a clear understanding of how data is submitted such could qualify or disqualify you for any payment incentives. Know how your information is measured and submitted for consideration. This recommendation would benefit a physician whose employer pays a base salary but also includes incentive compensation. Not only do you want to know the requirements for exempt or nonexempt determination for the bonus but also close attention should be paid to how the payments get calculated.

Although this model is changing, you can still find plenty of incentive designs set up by work relative units or wRVUs and, in other cases, collections. Incentive models such as those are gradually shifting to encourage more cost-efficient treatment at a high level of quality, like incentive models in which payment is determined primarily by value. 

What You Should Know About How Employers Pay Physicians

There are a few different ways for compensation to be outlined in a physician employment contract. 

  • Hospitals typically offer a pay structure that is driven by volume with a critical dependence on wRVUs.
  • Fixed salaries are often provided to new physicians in which performance has no impact on a set compensation.
  • Variable payment models, in general, get offered to doctors with extensive experience; they use formulas to determine salary amount based on a physician's performance.

In regards to the referencing of survey reports for indications of current salary averages within your skill level in your region, some health systems rely heavily on these reports to determine fair market value. The organization will make sure not to exceed payment renderings above the 75th percentile, regardless of whether an employed physician excels above the production of surveyed peers. 

If you are assessed on metrics and productivity, you want to make sure your suggested wRVU targets are within reason and that you understand your employer's expectations. If you have unrealistic benchmarks and high productivity demands, your chances of earning incentives on top of your base salary may become a pressing concern. This is especially the case as more hospitals are being reviewed for excessive payments under the False Claims Act and Stark Law. 

Additionally, learn what benefits, like a retirement plan, are to be included in your contract. A fair package will include more than the base salary.

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