PHYSICIAN EMPLOYMENT

1. PHYSICIANEMPLOYMENT Heather F. Delgado Partner

2. PROS & CONS OF PHYSICIAN EMPLOYMENT

3. PROS • May help with recruitment of specialists. • Can bring greater stability to a specific medical specialty. • Can financially incentivize physician productivity and quality. • May be more effective way to recruit young physicians. • Hospital costs may be offset by practice revenues. • May be retention tool.

4. CONS • Hospital bears ongoing cost of physician. • Hospital bears risk of operating and capital costs of practice ownership. • May cause polarization of medical staff between employed and independent physicians. • Hospital bears costs associated with recruitment and retention of employed physicians.

5. EMPLOYMENT AGREEMENT PROVISIONS

6. KEY TERMS • Duties and responsibilities. • Compensation and benefits. • Term and termination. • Insurance coverage and indemnification. • Restrictive covenants. • Confidentiality. • Miscellaneous.

7. DUTIES & RESPONSIBILITIES • Services (where, when and what). • Completion of medical records. • Administrative responsibilities. • Call coverage requirements. • Licensure requirements. • Medical staff requirements. • Board certification.

8. TERM AND TERMINATION • Evergreen clauses. • Without cause termination. • With cause termination.

9. INSURANCE COVERAGE AND INDEMNIFICATION • Professional liability and state requirements. • Claims made v. occurrence based. • Tail coverage. • Indemnification (i.e. unlawful activities, HIPAA breach, etc.).

10. RESTRICTIVE COVENANTS • State law governs scope. • Non-competition. • Reasonable in length of time and geographic. • Blue pencil clause. • Non-solicitation. • Liquidated damages provision.

11. CONFIDENTIALITY • Prevents taking of patient lists, charts, records and proprietary information. • Limits disclosure of terms to third parties.

12. MISCELLANEOUS • Governing Law. • Venue. • Boilerplate provisions. • Insurance Authorization/Power of Attorney.

13. COMPENSATION MODELS

14. COMPENSATION • Total compensation (base salary, bonus, benefits, deferred compensation) should be consistent with fair market value of the services provided. • Cannot take into account value or volume of referrals or other business generated. • Commercially reasonable. • No payments to reduce or limit services to Medicare or Medicaid enrollees. • Stark, Anti-Kickback and tax-exempt laws all require physician compensation arrangements to be FMV. • Enforcement climate is focused on FMV and commercial reasonableness.

15. FMV/COMPENSATION • Determination of fair market value: • National databases (i.e. AMGA, MGMA, Sullivan, Cotter & Associates, etc.). • Data available (i.e. primary specialty, annual salary, hours worked annually, etc.). • Use of percentile of reported compensation levels, state or regional data.

16. METHODS OF COMPENSATION • Fixed compensation. • Fixed compensation with productivity and incentive-based adjustments. • Revenue minus expenses. • Pay based on RVUs or other productivity measure. • Quality and patient satisfaction with wRVU based outcomes. • Fixed comp rate per wRVU. • Graduated scale. • wRVU compensation.

17. COMPENSATION • Percentage of Revenue. • Based on professional revenue (charges and collections). • Hybrid/Mix and Match. • Collections. • Cross Charges. • Visits/Patient Encounters. • Benefits. • Sign-on bonus. • Retention bonus. • Quality Incentive Pool. • Mid-Level Provider Supervision.

18. EVALUATION OF EMPLOYMENT • Availability and costs of recruitment and retention of employed physicians. • Resources available to compensate. • Payor mix of hospital. • Efficiencies or cost savings from relationship. • Physicians needs assessment. • Specialists v. primary care.