Physician Compensation Models

Understanding Your Options

Hospitals, physician groups, and clinics choose to employ or contract with clinicians, and each arrangement offers unique advantages. Whether you are a resident searching for your first practice opportunity or a seasoned physician seeking a change, an important factor to consider is which physician compensation model you prefer .

Below, we have outlined questions to ask during the interview process in order to better understand the total physician compensation model package, what it entails, and how it compares to other opportunities.

1.  Are physicians in your practice employed (W-2) or independent contractors (self-employed or 1099)?

Independent Contractors

The IRS considers an individual an independent contractor if the payer has the right to control only the result of the work and not plan or direct how it will be done. Paid via 1099, independent contractors are subject to self-employment tax and can deduct the employer’s share of Social Security and Medicare in their tax returns.

Employed

Per the IRS, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This applies even when you give an employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

Beyond the basic W-2 vs 1099 designation, many factors impact physician compensation packages. Below, we have listed several additional factors to consider in your interview process.

2. Does the physician compensation model include any incentives?

physician compensation models

While some practices pay a straight salary or hourly rate, many choose to reward their top physicians for providing efficient, high-quality care. Inquiring about performance-based incentives in a job interview can indicate that you are interested in the job. You can also receive a clear idea of what to expect from the potential employer’s physician compensation model if you inquire about the structure of incentives, metrics, and the expected benchmarks.

Some physician compensation models include incentives for:

  • Patient Satisfaction Scores
  • Efficiency: Productivity-based or RVU model
  • Readmission Rates
  • Core measures compliance

3. What administrative tasks and committee participation will be required?

Hospitals and groups want to find outstanding physicians who will be invested in the success of the facility or practice as a whole. Many require participation on different committees and community events, along with administrative tasks outside of their clinical duties. Be sure to ask about these requirements and how they relate to your compensation. Be sure to ask if you will be paid for time spent or if you will receive a bonus for your time.

4. Do you offer any ownership options?

Whether they practice in a local, democratic group or a national, multispecialty practice, many physicians desire the financial and practice benefits of becoming an owner. Find out whether the practice offers any ownership opportunities, and if so, what is required for eligibility.

We are proud to offer the opportunity to become an owner through ApolloMD Partners, Inc. With no ambiguity regarding eligibility, the program is popular among our physicians, advanced practice clinicians and corporate employees. In addition to the financial benefits, we have found our physicians and APCs enjoy practicing alongside other dedicated partners. Although we are a large, multispecialty practice with more than 2,500 physicians and APCs, the ownership option allows our team to connect with their partners across the country.

5. Do you utilize non-compete clauses in your contracts?

In the medical field, a non-compete clause is a legally binding contract where an employed physician agrees he or she will not work for a competing organization, start his or her own practice close by, or begin a practice of similar specialty close to the employer’s work. Employers do this to protect trade secrets, intellectual property, and their relationships with current clients.

Some practices restrict their physicians’ practice with non-compete clauses. Find out whether your contract includes a non-compete. If so, consider the impact this could have on your future practice. If you choose to practice at a nearby facility and your contract prevents you from doing so, your income and lifestyle can be negatively affected.

6. Who provides malpractice insurance or tail coverage?

If the practice provides malpractice insurance, understanding what types of coverage the organization offers is important.  The two types of policies on the market today are occurrence and claims-made.

Occurrence

The occurrence policy provides protection through the insurance company that insured you at the time of the incident and must defend you and pay any judgment against you, up to the amount of coverage you purchased, even though the policy may no longer be in effect.

Claims-Made

A claims-made policy requires you not only have a policy in effect when the incident or accident occurs, but also later when you are sued for the accident or incident.  If you are not insured with the insurance company when the suit is actually brought against you, you will not have any protection from the policy.  As long as you continue to renew your claims-made policy with the same company, it is obligated to defend you for claims arising from incidents that have taken place while you have been insured with the company.

Tail Coverage

When you cancel or non-renew a claims-made policy, you must buy tail coverage, which provides coverage for the tail of claims made against you later for things you did while you were insured with the company.  Tail coverage is referred to as Extended Coverage, Extended Reporting Period or Extended Reporting Endorsement.

What is right for you?

Learn more about the differences between claims-made and occurrence policies here. Understanding each of these policies, what the potential employer is offering, and who is responsible to pay are important to consider when deciding if the policies are sufficient for you and if the practice is the right fit,

7. Can I see a sample contract ?

physician compensation models

Always ask to read a sample contract as you evaluate a practice opportunity. The best practices will utilize physician-friendly contracts that are written in plain language and are easy to understand.

If you would like to negotiate a contract of employment, know that it can be harder with all the legal and insurance needs of clinical practice. Here are a few tips for trying to negotiate a contract.

  • Always be respectful. No matter what, treat your potential employers or contracting organization with respect.
  • Set your own priorities and see how they line up. This is a wish list for what you’re looking for in a potential practice to provide.
  • Develop a strategy on which priorities top the list. Choose a few things most important to you and stick to them. Make them your non-negotiables.
  • Come back to the lower priorities afterwards. Once the high-priority items are settled, determine if the lower priority items need to be negotiated or discussed or if you can live without them.
  • Get any changes written down. Do not rely on a verbal confirmation for these changes, you need to request the change in writing.

Following these tips can help you find a practice that will not only meet your needs but encourage you to thrive.

Are you interested in learning more about the practice environment and advantages of working with ApolloMD? Contact one of our clinical recruiters today.

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