Why Employers Should Cover Liability Tail Coverage

I recently wrote an article for my other blog – VITAL Physician Executive – that can be found here: Why Demoralize Your Employed Physicians Over Tail Coverage?

I followed it up with a similar post on LinkedIn here: Tail Coverage at LinkedIn. I’m not sure if this can be accessed by non-LinkedIn members, but the content is basically the same.


I have been thinking about this topic for a long time. When I was negotiating contracts for a regional hospital, we tried to get recruits to accept an agreement that required them  to pay for tail coverage when leaving the organization. Sometimes this was negotiated out, or was limited to certain circumstances. Continue reading

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Prioritize Engagement and Boost Career Satisfaction

As a current resident or fellow, you have grown up in today’s healthcare environment. As a result, you may not be as sensitive to some of the frustrations that more “seasoned” physicians like me find so annoying. But career satisfaction is a topic you should strongly consider as you embark on your search for that ideal job.

finances-career-satisfactionThere is good evidence that career satisfaction is not running high. Numerous blogs about financial topics for physicians, like the one written by my friend Future Proof, MD have cropped up. That’s cool. Physician’s really need the financial schooling. We make a lot of stupid financial decisions. Continue reading

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What Physicians Need to Know About Maximizing Income

incomeIt has been about six months since I posted here at Contract Doctor. I have been devoting my time to my new blog: The Vital Physician Executive.

But following a guest post on Future Proof MD, I was asked a question by a reader about optimizing his salary in the future. The circumstances are these:

  1. He began working on a fixed salary;
  2. After two years, he will be converted to a productivity model based 100% on worked RVUs;
  3. His wRVU rate (compensation per RVU) will be fixed and not open to negotiation in the future.

The question is this: Given that the wRVU rate is fixed, what tactics can he use to increase his income when negotiating his next agreement? Continue reading

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Risk Management


When entering the workforce as a practicing physician, it is important to have a working understanding of medical liability and risk management. Physicians are by far the most often sued professional in the U.S.

I had the opportunity to speak with a group of medical students and residents about medical liability and risk management recently, and I thought readers of this blog might benefit from the information shared during that presentation.

courtroomDefinitions and Background

Risk Management refers to a set of policies and procedures designed to reduce the likelihood of being successfully sued for malpractice. It encompasses strategies to provide high quality care, reduce harm to patients, reduce the risk of being sued and minimize losses in the event of a lawsuit. For this post, I am going to limit my comments to the first three of these aspects. Continue reading

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More on Risky Compensation Plans


I have seen more news reports indicating that CMS and the OIG are threatening to prosecute hospital systems that employ physicians when compensation plans do not align with practice profitability. And I had an opportunity to present this problem from the perspective of the hospital in a recent post on the Physician Business Adviser Blog on the HFMA (Healthcare Financial Management Association) website.

The blog post covers some of the same issues I addressed in my March 9, 2016 post (Five Actions New Physician Employees Should Take to Avoid the OIG). But I thought Contract Doctor readers might find the article informative as you enter into contract negotiations with hospital systems.

The post can be found here: Is It Time to Rethink Physician Salary Models?

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Working with Non-Physician Providers

This topic is probably not high on the list of items to worry about when entering into a new employment agreement, but I have seen it cause endless hassles and irritation to new physicians after starting a new position.

Recent Developments in “Midlevel” Providers

I will first note that NPs and PAs don’t favor being called “midlevel” providers. So, I tend to call them practitioners or non-physician providers (NPPs). Most physician-owned practices and hospital based groups have been hiring physician assistants and nurse practitioners for two primary reasons:

  • hiring a physician is a long, difficult, competitive process,
  • it is much less expensive to hire NPPs.

The number of PAs is projected to grow by about 40% in the next 4 years. But the number of jobs posted is growing by about 50% per year! The growth in NP positions is growing at a slightly lower rate. Continue reading

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Five Actions New Physician Employees Should Take to Avoid the OIG

I have been scanning the literature for articles describing OIG (Office of Inspector General) investigations and resulting fines related to the Stark Law and FCA (False Claims Act) as they relate to physician compensation. There seems to be more and more activity recently, including investigations in response to whistle-blower lawsuits.

Avoid OIGThe bottom line appears to be the following: hospitals and health care systems that use survey data (such as MGMA and AMGA) to set compensation levels for newly employed physicians seem to be under greater scrutiny if the collections generated by the employed physicians do not support the salaries being provided, or if the salaries as employees suddenly jump to a higher level than generated in their previous independent practices. This is a very common occurrence.

The Stark and FCA regulations require that physicians employed by systems that see Medicare patients do not refer patients for evaluation and treatment to the system in exchange for compensation.  They must also pay employed physicians based on fair market value. In the past, it was assumed that direct evidence of payment for referrals (e.g., emails, memos, etc.) was needed in order to demonstrate such a violation. Continue reading

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Online Resources

I just added a new static page to this blog.  It is called Online Resources, like this post. It includes some helpful publications and websites that physicians may find useful when reviewing an employment agreement.

There are literally thousands of similar resources out there, but I wanted to start with some of the most interesting and useful. As I find and analyze additional resources, I will update the page with the most recent additions listed at the top. If you have found especially useful online resources, please let me know and I will add them to the list. You can respond by responding in the Comments following this post.

Thanks – John


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Thoughts on Salary (part 3) – Example

clientLet’s take a deeper dive into RVU based compensation. Suppose that an organization that wants to recruit you is offering the following salary proposal: two years at a fixed salary, followed by a third year in which it converts to a fixed component PLUS an RVU based bonus. Let’s review the rationale and then look at actual MGMA numbers upon which the offer might be based.

Employer Perspective

The employer knows that it must offer a competitive salary, along with other forms of compensation and benefits, in order to entice you to sign on. For most specialties, there is still moderately fierce competition among employers for solid, well-trained physicians. The number of established physicians available is relatively small in comparison, so most recruiting is aimed at physicians coming out of residency and fellowship training programs. Continue reading

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Thoughts on Salary (part 2)

In Thoughts on Salary (part 1), I began with a discussion about the issues that impact an employer’s offer, the use of salary surveys and how RVUs are used to describe physician productivity. In this post, I will provide additional background on the compensation models that might be offered in an employment agreement.

piggy-bank-1595992_1280Older Compensation Models

For this discussion, I am going to take a historical perspective to compensation for physicians, starting with the earliest models and moving to the more recent models.

The earliest models were generally one of the following:

Net Income. This is the same model that any individual service oriented entrepreneur uses today. Compensation is simply the difference between collected revenues less the expenses of the business. A professional (whether physician, interior decorator, or yoga instructor) collects income for services, pays for associated expenses (marketing, insurance, staff, rent, etc.) and takes home the difference as salary.

This model is still used by solo practitioners and small groups. And some physician groups use a version of this method in which individual expenses are tracked, group expenses are shared using a formula, and take home pay is the difference between collections and the individual physician’s share of expenses.

In many of these groups, a certain percentage of earnings is held back for future investments or unforeseen costs. Some hospitals have used a version of this as well, but an estimation of expenses (sometimes called the allocation of expenses) must be used because the actual costs for support departments (like human resources, risk management, etc.) in a large organization cannot easily be attributed to an individual physician.

Fixed Salary. This method is very simple and is commonly used by non-profits and governmental agencies. The employer simply pays a fixed salary for the physician to work a set number of hours per week. It is also used when groups wish to employ physicians not on a partnership track, especially in specialties in which shift work is most common (emergency medicine, anesthesiology, hospitalist, etc.). This is also commonly seen with physicians working in nursing homes or with hospice organizations and other non–profits.

Continue reading

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