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Greetings, and welcome back to Part 3 of our six-part series, Physician Contracting 101.
Today in Part 3 we will look closely at Compensation and Bonus Provisions. These provisions are
incredibly important in your contract. In my practice in dealing with physicians, many
times if they are unhappy with the contracts they are currently in, it has to do with compensation
and how it is being determined. It is incumbent upon you, and me as your counsel, or whoever
your counsel is, that you make sure you understand how the compensation provisions actually work.
In today's session, we are going to look closely at compensation and what contract language
about compensation means. Within the compensation provisions in an employment contract for a
physician, typically they will occur in two ways. On the first hand you will have a set
salary, so you may have a provision that says you will be paid approximately $250,000 annually
for the services you provide. What has become more typical, however, in some of the contracts,
is it is based on RVU's, and you will hear it is based on an MGMA survey as to what the
conversion factor is going to be, and if you are going to be in the fiftieth percentile,
or if you are going to be in the seventy-fifth percentile, or can you move up to the ninetieth
percentile. In other words, it becomes extremely complicated, and you must fully understand
how the compensation factor will be determined. Typically what happens is, you will have your
RVU units multiplied by the conversion factor, and that will set your salary. A lot of times,
the way the contracts are drawn, is they will look at sort of giving you a percentage draw,
based approximately upon an eighty percent range, and then they will have a true-up either
at the end of a quarter, or at the end of a year, to make full payment to you. Or, if
you haven't worked a sufficient number of RVUs, what you will owe the hospital back.
Again, you need to make sure you understand what the contract provides. In addition, in
the changing landscape of the ACA (Accountable Care Act) and a number of other things going
on in the health care world, the way a physician is actually compensated or paid is likely
to change, and you need to make sure what your contract provides. Recently I have been
at a number of different conferences and they talked about changing from an RVU to QVU,
or something based on a quality basis rather than simply on a type of act done by a physician.
If it moves to quality, it changes the whole ball game in regard to how you will be compensated,
and you need to make sure you understand what those ramifications will be. Further, there
is a number of different programs currently out talking about shared savings, and you
should make sure that your contract provides that you can share in the shared savings of
your group or of the hospital, if you are in fact part of the acts of what is causing
the savings to occur. So I guess in final regard to the compensation provisions, you
need to make sure that you understand your contract and what your contract provides.
Similarly, there are a number of different bonuses that are a part of a compensation
package. Many times you will see a sign-on bonus; you will see a relocation bonus; you
may see an educational loan option; you may see other types of bonuses that are based
on productivity. Whatever the types of bonuses, you should be careful and make sure that you
understand how you earn those, and when in fact you may have to pay them back. Many contracts
have provisions that, if you leave at a certain time of your employment, you may have to pay
all or part of your bonus back to the company, or to the hospital, or your physician group
that you are working with. In any event you need to understand what the bonus amount is,
how it will be paid, and what your obligations are for paying them back, if there are any.
Finally, we need to look at what are some of the other benefits that you will receive.
Typically the contract will set forth your vacation, your PTO, your sick time, what you
need to do as far as CMEs or your continuing educational needs, and how those things are
played out. Sometimes in a contract, they will have provisions that simply say they
will be provided to you in accord with policies, or regulations or rules of the hospital. If
a provision like this occurs in your contract, you need to make sure that you request those
policies, rules, or handbooks, so that you can look at and understand how you will be
receiving these other benefits, and what the actual benefit package is. So there is a lot
to remember as you look at your Compensation package. But remember, it is vitally important.
I thank you again for joining for Part 3 of our series, and I hope that you will tune
in for Part 4. Thank you.