Physician Compensation Models: Understanding Your Options

Whether you are a resident searching for your first practice opportunity or a seasoned physician seeking a change, one important factor to consider in your job search is which physician compensation model you prefer.

Hospitals, physician groups and clinics choose to employ or contract with clinicians, and each arrangement offers unique advantages. 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.

The Basics: IRS Classification

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

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

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 is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

Beyond the Basics: Physician Compensation Model

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

Does the physician compensation model include any incentives?

While some practices pay a straight salary or hourly rate, many choose to reward their top physicians for providing efficient, high-quality care. Does the practice offer any performance-based incentives? If so, what is the structure? Which metrics are incorporated, and what are the benchmarks?

Some physician compensation models include incentives for:

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

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 in 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. Will you be paid for the time spent or receive a bonus for your time?

Do you offer any ownership options?

Whether practicing 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.

At ApolloMD, we are proud to offer a Preferred Physician Partner ownership program. With guaranteed return on investment and no ambiguity regarding eligibility, the program is exceedingly popular among our physicians, and in addition to the financial benefits, we have found that our physicians love practicing alongside other dedicated partners. Although we are a large, multispecialty practice with over 1,000 physicians, the ownership option allows our team to be connected with their partners across the country.

Do you utilize non-compete clauses in your contracts?

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

Who provides malpractice insurance? Tail?

Will you be responsible for your own malpractice and tail coverage? If the practice provides malpractice, which type of coverage is used?  Claims made or occurrence based? Find out the coverage limits and whether they will be sufficient for your needs.

Can I see a sample contract?

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

Are you interested in learning more about the practice environment and advantages of working with ApolloMD? Contact one of our physician recruiters today. We would be happy to answer any questions you may have regarding the physician compensation model.