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CONTRACT NEGOTIATIONS

Understand the important elements of physician contract negotiations, from duties and responsibilities to compensation, benefits, and noncompete clauses. Learn key negotiation strategies and pitfalls to avoid for a successful agreement.

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CONTRACT NEGOTIATIONS

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  1. CONTRACT NEGOTIATIONS CHAD CARLSON MD MARK STOVAK MD

  2. Duties/Responsibilities • Your responsibilities should be clearly stated in the contract • If something that might fall under your job responsibilities is not listed in the contract, make sure that there is a separate clause that stipulates how the reimbursement will be determined for that work

  3. Duties/Responsibilities • Examples to consider • Inpatient work • Call rotation • Administrative duties • Community outreach • Talks • Sports physicals • Other PR work

  4. Duties/Responsibilities • Examples to consider • Training room coverage • Professional output • Published papers • Presentations at national meetings • Student/resident education

  5. Duties/Responsibilities • Patient care responsibilities • Indigent care • Surgical post-op checks • Structure of the workweek • Saturday clinics

  6. Duties/Responsibilities • Restrictions • Moonlighting • Is this covered by your malpractice? • Other medically-related business ventures • Do you have to “pass-back” a percentage of outside earned income?

  7. TERMINATION • At Will State (no reason needed) • How much notice to quit/be terminated • What constitutes breach for each side • Can cause of termination be cured • What happens to benefits if fired without cause • What about your restriction covenant • What happens if disability

  8. Noncompete Clauses • Flexibility depends on the local job market • At a minimum, try to negotiate away the noncompete for any at-will termination

  9. Noncompete Clauses • Points to consider • How important is it to you to stay in this area? • What is your state law with regards to restriction covenants?

  10. TERMS OF CONTRACT • Stick with 1 year & renew each year with salary raises • 2 year guaranteed contracts may be ok if there is a bonus clause in it once overhead & salary is covered

  11. COMPENSATION • Pay (Know the market) • AMSSM Economics Committee survey • MGMA • What formula is used to calculate pay/bonus/overhead % • Equal pay among group • Straight Production (eat what you kill) • Combo

  12. COMPENSATION • Distributions of managed care capitated income • More pay for academic advancement, committees, leadership • Charges • How much • Who determines • Payer mix • Collections • Who owns them • Who collects them (office manager, group, physician, lawyer)

  13. COMPENSATION • Guarantee • Moving expenses/pay advance until start practice • How long • Pay back • Overhead • Float/payback • Bonuses • Sign-on • How often • How much • Eat what you kill • Less than partners

  14. BENEFITS • Retirement (401k/403B) • Employer match • Pension • Vesting periods • Important if you are employed at-will • Flexible spending (Day Care/ Health Care) • Student Loan Reimbursement • Marketing -- How will your practice be promoted?

  15. BENEFITS • Paid Vacation (sick leave) • Boards (time off & pay) • CME (pay) • Pager/phone • Dues/subscriptions • Maternity/paternity leave (pay) • Bereavement leave • Military leave • Jury duty • FMLA • Who covers practice/call when away?

  16. BENEFITS - Insurance • Malpractice (type/limits) • Deductible (who pays) • Tail coverage for claims-made policies (who pays if you leave) • Long/short term disability (own occupation/waiting period) • Office Liability • Life • Health/dental • Disability/Overhead Expense • Umbrella

  17. PARTNERSHIP • Buy in • Automatic after a probation period • Benefit • Pay raise • More say • Downside • Debt (building, diagnostics, PT, surgery)

  18. RETIREMENT/DEATH • What happens to partnership share • Buyout • Who gets Accounts Receivable (AR) • Benefits for me/family last how long

  19. PEARLS • Know your alternatives • Know your strengths • Support your positions with real numbers whenever possible • Learn each party’s needs • Do not play hardball • Best contract is the one that meets both parties needs

  20. PEARLS • Use a contract attorney to review the contract prior to signing • Only you can decide what is worth negotiating over • The more competitive the job, the less bargaining power you have • Understand who your boss is

  21. BIBLIOGRAPHY • From Residency To Reality: Practice Management Teaching Tools - Negotiating The Details, AAFP, 1 (4), 1997. • Location, location, location: The geographic facts about noncompete clauses, AMedNews, Jan 30, 2006.

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