There are many different ways in which physician and advanced providers are compensated for their professional services. The approach taken can depend on the type of employer (i.e. private group vs. institution) as well as the medical specialty. There is no one way which is the “right” way to handle compensation, so it’s important to understand your own compensation formula and determine if it is fair for you!
Base Salary
The most common way that heath care providers are compensated, particularly in their earliest years of practice, is by payment of a base salary. A base salary is simply a fixed amount paid out on normal payroll dates and does not vary over the course of the year. In a job such as anesthesia, where the practice may simply allocate the workload evenly, many providers within a given licensure are paid the same amount, perhaps varying only based on years of seniority with the employer.
Bonuses
In addition to a base salary, an employer may offer some type of bonus. The bonus might be discretionary (i.e. you may or may not get anything) and is often based on overall financial success of the employer. Another popular type of bonus is tied to provider production, and can be based on RVUs, collections or other performance measurements and is intended to incentivize a provider to work more or to take on more cases. Production-based bonuses are less common in anesthesia and similar specialties, where the provider often cannot control the volume of patients and where work is generally shared equally. For anesthesia providers who work in surgery centers, who render pain medicine services or perhaps are able to pick up additional shifts in their work setting, bonuses tied to production are not uncommon.
Production Compensation
Another common approach to compensating providers is based on pure production. Depending on the type of anesthesia employer that one works for, production based compensation may or may not work. Most commonly we see production approaches in surgery centers and other types of outpatient facilities, and it can also be integrated into hospital-based group compensation arrangements where there is opportunity to choose more and/or different type of shifts or locations to work. Production itself can be based on measures such as collections generated by a provider or the use of work relative value units (wRVUs). It is important to understand exactly how you are being compensated and what the projections are for your performance in working for the employer before switching to or accepting a production model. Is there enough work for everyone so that you will generate the collections and/or RVUs that are expected of you? If an employer is overstaffed and there is not enough work, an employee may fall short in meeting production numbers. What data will be shared with you regarding your production and how often will you actually be paid? Many employers provide a “draw” which works as a base salary, with actual production calculated and reconciled on a quarterly or annual basis. Production above the draw is paid out as a “bonus”. Production below the draw can put the provider in a deficit position.
“Extras”
Many employers are willing to pay sign-on bonuses, relocation allowances, retention bonuses and other similar amounts to recruit and keep providers. Make sure to ask about these benefits but be careful to review any repayment requirements that can tie you to a job and/or penalize you when you leave. These extras, in addition to fringe benefits that may be offered, can often make up for other portions of a compensation arrangement you find lacking.
Termination Issues
Anesthesia providers should understand how termination impacts compensation. While on a base salary, you may simply receive the last paycheck in the event of termination. If a discretionary bonus is to be paid there is no right to expect it, particularly in the event of termination. However, a bonus or compensation that is tied to production is something you must look out for in termination language. Is there a pro-rated amount paid in the event of termination? Do you need to be present on a certain date in order to be entitled to receive the bonus? What happens if you have been paid more in draw than you have generated as of the date of termination in production—what are the requirements to repay any deficit? As it relates to the “extras” mentioned above, always be aware of whether repayment or some or all of those amounts will be required.
Many employers now also include additional income that can be earned based on meeting quality measures, but such provisions are still relatively rare except in hospital contracts and often lack clarity on how they can be earned. Make sure to ask questions about how you can earn every possible dollar available in your contract and consult with counsel to be sure you understand the compensation provisions that impact your financial success.
Author: Ericka Adler, J.D., LL.M. concentrates her practice in regulatory and transactional health care law. She represents individual providers, physician groups and other health care entities in satisfying their day-to-day legal health care needs. Ms. Adler devotes a large part of her practice to advising professionals and practices on their contracts and compensation arrangements, and in assisting her clients in the acquisition and sale of health care entities. She works with providers in matters relating to HIPAA, fraud and abuse, billing audits, government investigations, licensure matters and contract disputes.
Ericka Adler can be contacted at eadler@ralaw.com or 312-580-1602
