source: https://www.zwire.com/site/news.cfm?newsid=13074854&BRD=1142&PAG=461&dept_id=142778&rfi=6

It is advisable to hire a lawyer to review any contract you intend to sign. Retain a lawyer who has knowledge of contracts, particularly health care contracts, and who can help you understand the responsibilities and expectations outlined in the contract. A local lawyer is best; he or she is more likely to be familiar with state and local laws. It also is important to know if the lawyer has handled PA contracts before and how many years of experience he or she has had in the area of contract law. 

Terms and Termination 
The term, or length, of the contract must be stated, including your starting date and the duration of the initial contract. Perhaps more important, the contract should state whether it can be terminated early if notice is given. If so, the amount of notice and reasons for justifying early termination should be carefully described. Termination provisions are either "with cause" or "without cause." 

Termination without cause means the contract can be ended by either party at any time without reason. Typically, a 90-day notice is required. You may be able to negotiate for a "balloon buyout" that provides extra compensation. 

Termination with cause provisions protect employers from liability due to employees who engage in illegal or illicit behavior. Legitimate causes for dismissal should be clearly defined. 

Payment of bonuses, severance pay, and vacation or sick time reimbursement should be addressed. Malpractice insurance premiums should be mentioned to ensure you are not required to refund money your employer has paid for these premiums. 

The contract should state how often a formal job performance review will be conducted — for a new position, this is typically at one-month, three-month, and six-month intervals. 

Contract Renewal 
Every contract should include an option to renew or a provision to renegotiate based on a performance evaluation. Performance criteria should be included or attached to the contract.

Employee versus Independent Contractor 
State and federal laws vary. It is important to specify the relationship, however, because your employer’s liability regarding employment taxes and pension benefits will be affected. The Internal Revenue Service has guidelines that you and your tax advisor should examine. 

Services to Be Provided 
The area of medicine in which you practice and your duties and obligations should be clearly defined, including working times, sites, and practice duties. Requirements for rounds and on-call duties should be clearly stated. Be sure to address whether clauses that may prohibit holding a second job apply to volunteer health care or nonmedical employment. 

Credentials and Privileges 
The contract should specify the professional credentials, for example, NCCPA certification, that you must possess or obtain within a specified time. It also should specify whether you must apply for or obtain privileges at certain hospitals. 

Compensation 
More disagreements arise over compensation than perhaps any other issue. Will you be paid a salary, an hourly rate, a percentage of fees billed or collected, or salary plus bonus based on productivity? If your compensation will be based on a percentage of fees billed, specify which fees will be included in the calculation. If you will be paid an hourly rate, include a minimum number of hours per week or per month to ensure adequate income. 

Terms should be clearly defined in the contract — not only the amount (and/or percentage of productivity income) but also the frequency of calculation and payment. For comparison purposes, find out what colleagues in your area earn from a customized salary profile provided by the AAPA for a nominal fee. 

Malpractice Insurance 
Who will pay for malpractice insurance? How much will it cost? Will you be listed on your supervising physician’s policy or have your own policy? Be sure to compare the options before you sign the contract. 

Become familiar with both occurrence and claims-made policies. An occurrence policy covers alleged negligence that occurs during the policy period, regardless of when claims are reported. Claims-made policies cover incidents that happen and are reported while the policy is in force; for an extra premium, often a large one, tail coverage will protect you against claims filed after the policy ends. 

Your malpractice policy should cover liability for services rendered (or not rendered) and all legal costs, regardless of the suit’s outcome or whether the suit was fraudulent. Try to obtain an ultimate net-loss policy, which will cover all legal fees. 

As a service to its members, AAPA sponsors a professional liability insurance program. For more information and an application form, call 877/356-2272. 

Fringe Benefits 
The contract should describe both included and excluded fringe benefits. Typical benefits include vacation and education leave, travel expenses related to education leave, professional dues, licensure fees, hospital medical staff fees, books and professional journals, NCCPA fees, Drug Enforcement Administration registration fees, health insurance, disability, life insurance, and retirement plans. 

Sick Leave and Disability 
The contract should specify if you will continue to be paid if you become sick or disabled, and, if so, for how long. Often practices have different disability policies for physicians and other employees; it is important to understand which one will cover you. If you purchase the policy yourself, the federal government does not tax it; therefore, it may be advantageous for you to do this and negotiate a higher compensation package. 

Purchasing into the Practice 
If you hope to buy into the practice eventually, the conditions of the buy-in and basic terms of purchase should be spelled out, usually in a separate letter of intent. This letter should include methods for valuing the practice assets and the physical site, and it should outline your participation in business decisions, the length of time it will take before you become a full partner, and the amount and terms of the purchase. 

Restrictive Covenants 
A restrictive covenant, sometimes called a "noncompete clause," is a provision in the contract that prohibits you from practicing in a given geographic area or given medical specialty after you leave a practice. This is usually for a defined period of time, often a few years after leaving the practice. 

These clauses are enforceable in most states if the terms are considered reasonable. A 10-mile restriction might be reasonable in a rural area but not in a metropolitan area. Consider the following to be red flags for undesirable arrangements: exclusions from practicing in entire countries or states; a prohibition from practicing at a particular hospital; or an employer who says, "Oh, don’t worry about signing that; we would never enforce it." If you must negotiate a contract with a restrictive covenant, be sure it is something you can live with. Consider adding a clause that declares the restrictions void if you are dismissed without cause. 

Disputes 
Check that the contract specifies whether disputes between you and your employer will be settled by mandatory arbitration or in court and whether the prevailing party will receive lawyer’s fees and costs. The contract also should include a clause that allows you and your lawyer access to patient medical records if a lawsuit is brought against you after you leave the practice. Otherwise, your lawyer may have to subpoena the records, which is a costly process that can take months. 

Summary 
After meeting with your prospective employer, drafting a contract, reviewing the employee handbook, and discussing the contract with your lawyer, are you ready to sign on the dotted line? Perhaps. As you review each section of the contract, imagine situations that could arise. Ask yourself, "What would happen if...?" Then make your decision based on a knowledgeable review of the contract and good common sense. 

Most recent PA contributions:

I'm a bit testy today so you may want to take that in consideration! YOU pick a salary and benefits you want and tell them to find a way to make it happen. Then shut up-putting the burden back where it belongs. I think at times things like RVUs can seem like a fair leveling of the playing field and easier for the administration to point to an abstract idea formalized as a strong negotiation point. No Way! If you have two SPs wanting you, you have two allies if they have any backbone. You might marshal some advantage using Salary.com It gives a range of salaries and you sound like you're in the top bracket not 90% but 100+ %. I hope this helps...bill

#1 What you have to remember is that you are a DEPENDENT practitioner. That means you do not have your OWN patients in a typical RVU system.

That also means that you depend on your SPs for your patient load and work you do. You are actually seeing their patients for them instead of them seeing them themselves. If your SPs had another Orthopaedic Surgeon see their patients or do the work you are doing for them, believe me they would have to pay them fairly or they would not do it.

That being said, you should not be taking a salary decrease just because you are switching to a RVU system. If your SPs want you in surgery, then that is fine, but they are going to have to justify to the new "practice managers" why they want you there and how they are going to pay you for that time as you will never be able to bill enough RVUs in that setting unless you have all cash patients or all work comp patients in some state that has a very good work comp reimbursement for PAs working in surgery.

Your "salary" cannot be based solely on what RVUs you generate. It has to be part of the SPs RVUs as well. You are doing many parts of the work they are getting paid for when you do pre-op H&Ps required by the hospitals but not reimbursed from insurance companies, writing orders, doing rounds and discharge summaries, post-op visits, etc.

Do not sell your services short. Think of what your SPs are doing because you are helping them. Are they going home early, not coming in on weekends, adding more cases on, seeing more patients in the office? I almost bet that all of those apply?

Maybe you can ask you SPs to form some type of bonus situation where they pay you on a quarterly basis a percentage of their collections for those services?

#2 We had the same problem. When you negotiate with a hospital administrator, the personal level is gone. They need a certain number of PAs/ARNPs and they know the salary they HAVE to pay to get them. In my case, when my physicans sold out to the hospital, the hospital gave me a substantial raise over their initial offer because my physicians thought I may leave them. My doctors explained to them that the RVU system didn't work in my case because I do all the free stuff so they can maximize THEIR RVUs. The hospital finally relented and gave me a nice raise. Not to the same level the other privately employed ortho PAs in my area make, but to one of the highest paid PAs here at my hospital.  In short, your doctors have to stand up for you. To the hospital, you're just a number

Here's are more PAs thoughts:  It's a very confusing system.  It is based entirely on what we bill.  Our monthly pay is based on how many rvu's we generate for each month.  This is averaged over 6 months.  The pay scale is graduated so I am paid more for producing more.  i.e. if I generate a 6 month average of 208 rvu's per month, I would be paid $25/rvu for that month; if I generage a 6 month avg. of 270 rvu's per month, I would be paid $31/rvu for that month. (209 pays $28, 229 pays $29, 251 pays $30).  This graduated "conversion factor" is different for each specialty.  This is the orthopedic model.  It has to do with the % of writes offs within each department. In other words, the write offs in ortho are higher (more medicare pts) than they are say in Occ. Med (more workers comp, company contracted prices and insured pts.).  I am still not exactly sure how this formula works.  I work in a very large multispecialty clinic and there really was not a lot of negotiation in this process.  As for the work we do under a global billing situation, we only get credit for seeing a post-op pt. in the clinic.  This value was assigned by our admin., it is not billed to say medicare and it is not subtracted from the surgeons global rvu.  Other than seeing a few post op visits in the clinic, I don't do a lot under the global fee.  I am mostly clinic based, I assist in surgery 1 day a week when we do our bigger cases....total knees/hips/shoulders/ACL's.  I do evening rounds the night of surgery.  The surgeon I work w/does the majority of post op care.  If you are mostly hospital based, this would be different for you.  If you are doing a lot of work under the global fee, you need to figure out what your time is worth.  i.e. if you were not doing post op care, what would you bill out in the clinic per hour for seeing pts. where you would be generating rvu's.   I know this is confusing, let me know if I can clarify anything.  Make sure you get reimbursed for what you do and for what your time is worth.  You also have to look at the big picture.  You need to compare your pay & benefits to those in your specialty but also to those ortho PA's in your part of the country.  Our pay is entirely on rvu's generated.  We are alotted a certain amount of days off and cme days throughout the year but they are not paid days off.  in other words, if you are not at work, you are not generating rvus and you don't get paid.  Since our pay is based on a 6 month average, we don't feel it as much if we take a week or 2 off.  Hope this is helpful.....let me know how your system works.  I think this system works ok for us but too early to tell.....we have only been on it for 2 months.  It definitely is a system based to incentivize providers to work harder, see more pts. and bill accurately.

Links:
Download the National Physician Fee Schedule Relative Value File
http://en.wikipedia.org/wiki/Resource-Based_Relative_Value_Scale
http://www.physicianspractice.com/rvu
http://www.mgmadashboards.com/compTerms.aspx#div6
http://www.archives.gov/federal-register/publications/faqs.html
http://www.cms.gov/center/physician.asp

Physician and Physician Assistant Employment Contract

This employment agreement is between:

_____________________________ (here-in referred to as Employer) and

______________________________ (here-in referred to as Employee) for the independent contract of professional medical services.

For good consideration, the Employer employees the Employee on the following terms and condition.

Term of employment

Subject to provisions for termination set forth below, this agreement will begin ______________________________ and will terminate on the same date in one year from this date.

Renewal of Agreement

The terms of this agreement may be extended or renewed by mutual written consent and signed agreement. 
An option shall be available to renew the agreement with provision to renegotiate the reimbursement for services based upon performance and productivity. Performance and productivity terms shall be noted by Attachment to this agreement.

Compensation

Employer agrees to pay employee an annual salary of $______________________________, payable every two weeks, for professional medical services rendered. 

Position and Services

Employer employs Employee in the capacity of Physician Assistant. The duties are: medical services, as agent of Employer and as outlined by the Texas Medical Practice Act, that include, but are not limited to, physical examination, ordering and interpreting diagnostic tests, medical management of disease, prescribing prescription medications, medical and surgical procedures, counseling, medical and surgical referrals and any additional services afforded physician assistants through changes of state regulatory statute in the future.
 

Hours of Service

Office hours are:
On Call hours are: 
Hospital rounds are:
 

Standard of Care

Employer and Employee agree to maintain the practice environment within the standards of care as outlined by applicable state and national statues regulating the practice of medicine. This includes the appropriate superintendence of medications, equipment and records used in the practice of medicine and the care of patients.
 

Reimbursement of Expenses

Employer agrees to pay for Employee¹s reasonable expenses incurred for maintaining certification and licensing requirements, including Texas license fees, DPS and DEA registration fees, and malpractice insurance on a claims-made basis.
 

Paid Time Off

Employee shall be entitled to two (2) weeks Paid Time Off (PTO) per year at full pay. 
Time is accrued from the date of employment but is not available until ninety (90) days of employment has been completed. The first week may be taken as accrued following ninety days of employment, the second week may be taken after the eleventh month of employment is completed.

Additionally, Employee is entitled to two weeks (ten working days) of Paid Time Off at full pay for continuing medical education (CME).
 

Holidays 

New Years Eve and Day, 
Memorial Day, 
Fourth of July, 
Labor Day, 
Thanksgiving and 
Christmas Eve and Day.
 

Billing Practices and Collections / HIPPA

Employer grants Employee authorization to review and advise on the practice¹s billing and collection procedures and practice - in that the State of Texas holds all medical licensees under the State Board of Medical Examiners ultimately accountable for their business practices as well as their medical services. 
Employer and Employee agree to pursue due diligence to provide precise and accurate ICD-9 and CPT coding of their services. 
Both parties agree to follow all applicable HIPPA laws and to maintain confidentiality regarding both patients and the practice.
 

Termination of Contract

Employer may terminate this contract for just cause only, i.e. failure to maintain license and certification required for practice in the State of Texas or felony conviction, including fraud. Employer and Employee may terminate this agreement by mutual consent and 45 days written notice.

Employee agrees to provide Employer one month (30 days) notice if Employee prematurely terminates this contract.

Termination of this contract by either party must be made in writing.
 

Litigation Assistance

Employee shall, upon reasonable written notice, furnish such information and assistance to Employer as it may reasonably require in connection with any litigation Employer and Employee is, or may become, a party either during or after employment
 

Disputes

The party¹s respective attorneys shall initially arbitrate any dispute arising over this agreement or the breach of it, in accordance with the rules of the American Arbitration Association. If no solution can be achieved, each party may pursue remedy in the appropriate court at law.
 

Post Employment Restrictive Covenant

Employee agrees not to actively pursue solicitation of patients from this collaborative practice to any future medical practice he/she may join for a period of one year.
 

Severability

If, for any reason, any provision of this agreement is held invalid, all other provisions of this agreement shall remain in affect. If this agreement is held invalid or cannot be enforced, then to the full extent permitted by law any prior agreement shall be deemed reinstated as if this agreement had not been executed.
 

Assumption of Agreement by Employer¹s Successors and Assignees

Employer right¹s and obligations under this agreement will inure to the benefit and be binding upon any successors and assignees.
 

Additional Work Opportunities 

No part of this contract prohibits Employee from pursuing additional employment to augment personal income provided there is no overt conflict of interest, schedule conflict, or ethical issue that may be incompatible to a third party review.
 

This contract is the entire agreement between Employer and Employee. Oral modifications shall have no effect. This contract may be altered only by written agreement signed by both parties,

_________________________          _________________
Employer                                 Date
 
 

_________________________          __________________
Employee                                Date
 

Notary Pubilc:

resource of this contract is Richard Branson   rpbvjl4us@compuvision.net

Can You Negotiate Better Reimbursement?
Gregory J. Mertz MBA, FACMPE 

Gregory Mertz is president and CEO of The Horizon Group, a medical practice management consulting firm based in Virginia Beach, Va. He has more than 30 years of experience in health care administration and has managed medical groups from three to 300 physicians.

With the right data and a reasonable approach, you can overcome some inequities in payers’ fee schedules.

It has been more than a decade since increases in fees have resulted in increases in income. The introduction of the Resource Based Relative Value Scale (RBRVS) and the adoption of a national fee schedule by Medicare virtually eliminated a practice’s ability to generate more income from insurance plans by increasing what it charges for services.

Today, most health plans operate with fixed fee schedules. Often these schedules have little in common with the RBRVS, and while some are roughly based on a percentage of what Medicare pays, they may be tied to payment levels that are three or more years old. Most physicians who question this methodology for paying for professional services are told to take it or leave it.

Some practices are finding, however, that negotiating with payers for fairer payments is possible. This does not mean payers are willing to grant large increases just because you ask. But with the right data and a reasonable approach, you may be able to overcome some inequities in existing fee schedules.

Do your homework
Solid data and a well-reasoned approach are key to negotiating better reimbursement rates. Most of the data you will need are readily available, particularly if your practice uses a computer-based billing system.

Step 1: Determine your most common CPT codes. Most primary care practices derive the bulk of their revenue from office-visit, hospital and preventive-medicine codes, so the number of codes you will need to study may be limited. Be sure the codes on your list account for at least 75 percent of total practice charges. Next to each CPT code, record its frequency, that is, the number of times you provided the service over a 12-month period. Be sure to include some lab charges or procedures to see whether different payers have different reimbursement schemes for these services.

If your practice uses billing software, you should easily be able to generate reports on your CPT codes and their frequency. If your practice generates invoices manually, have your billing staff keep tallies of the CPT codes you have included on your superbills. Three months of data should be sufficient. If you use this manual method, pick three of your busiest months.

Step 2: Determine your top payers. Again, if you have an automated billing system, you can likely run a report on your top payers. Since Medicare and Medicaid use established fee schedules and do not negotiate, focus on the three to four other payers that make up the bulk of your reimbursement.

Step 3: Determine your reimbursement for each code. Review the Explanation of Benefits statements you receive from each of the payers you selected and note how much they allow for each code on your list. Be sure to use the “allowed” amount, not the “paid” amount. The paid amount is the allowed amount minus any co-payments or deductibles the patient pays to the practice.

In addition, calculate each payers’ reimbursement rates as a percentage of Medicare’s reimbursement rates. For example, a health plan may pay 110 percent of Medicare’s rate for code 99214. You can find Medicare’s current rates for your geographic area through the “Medicare Physician Fee Schedule Look-Up” tool at https://www.cms.hhs.gov/physicians/mpfsapp/step0.asp. There, you can also find the current relative value units (RVUs) Medicare assigns to each code.

Because more and more health plans are beginning to use RVUs, it is important to understand how they work. Under the Medicare RBRVS, each service is assigned RVUs based on the physician effort, practice expenses and malpractice risk involved. For example, the total RVUs for a 99214 office visit are 2.2. To calculate the payment for this service, you simply multiply its total RVUs by the annual conversion factor. Medicare’s conversion factor for 2004 is $37.34; therefore, its rate for a 99214 office visit is $82.15 (plus or minus geographical adjustments).
 

Step 4: Review your fees for each code. Note your current fees for each CPT code on your list, and calculate your fees as a percentage of Medicare’s rates. If you find that an insurance company is reimbursing some of your charges in full, this may mean your fees are too low and the insurance company may be willing to pay more. Consider raising those fees or, better yet, standardize all of your fees at some percentage of Medicare, perhaps 125 percent. If your payers seem to pay more for procedures or diagnostic studies, establish a tiered fee schedule that sets evaluation and management services at 125 percent of Medicare while charging 150 percent of Medicare for other services. Whatever method you choose, be sure to update your fee schedule annually based on changes to the Medicare fee schedule.

Step 5: Organize and analyze the data. Once you have gathered the above data, organize it onto a spreadsheet or chart, such as the one shown on page 33. This will help you identify which codes or health plans should be targeted for improvement.

In general, focus first on the codes with the highest volume and dollar value, as they will yield the most return for your effort. In addition, if one health plan’s rates are clearly lower or if one code is paid at a much lower percentage of Medicare than the others, this may be a likely target for negotiation. For example, if you find that one of your health plans pays 99 percent of Medicare for preventive services and 150 percent of Medicare for lab services, you could use that as a negotiating point, as most health plans are committed to preventing disease and should provide proper incentives to do so. What’s more, some insurers pay specialists at a higher rate than primary care physicians. This is a remnant of the days when Medicare had two conversion factors (one for surgeons and one for “cognitive” specialists). If you can demonstrate this inequity, you may secure better reimbursement rates.

After you weigh these kinds of issues, establish target reimbursement rates for your negotiations, say 120 percent of Medicare for most services. A sample is shown in the far right column of the table below. To determine the impact these target rates would have on your practice, multiply them by the frequency for each code. The table below reflects this analysis. It shows a potential 8 percent increase in revenue for the codes targeted.

Take action
Once you have completed the fee analysis, you should act on what you have learned. These are some of your options:

Negotiate individual fees.
Unless you dominate your market, payers are unlikely to grant sweeping fee increases. However, you may be able to negotiate increases for individual services if you can demonstrate inequities using your data analysis (from step 5, above).
 

Typically, your first contact in the negotiation process should be the health plan’s provider relations representative. If your argument to this individual is compelling, the discussion will move up to the contracting manager or network manager. The medical director essentially has no role in the business side of the plan. If you are performing a procedure that is new or not well defined, the medical director might be able to support your argument for a higher payment for that specific code or a specific case, but negotiating rates is generally not within the medical director’s scope. (For a real-life negotiation example, see below.)

Drop the plan.
If a health plan’s payment levels are extremely low, you may be tempted to bypass negotiations and simply no longer accept patients from that plan. Whether this is a sound strategy depends on your local market. For example, if you practice in a highly competitive market, those patients will easily find another physician and you will simply lose market share. However, in less competitive markets, patients may complain to their employers that the loss of your practice has created a hardship and they may pressure the insurance company to return to the bargaining table. Whatever your situation, don’t threaten to drop out of a plan unless you intend to follow through. Most plans will call your bluff.
 

Close to new patients.
While you may not want to drop a health plan completely, you may wish to stop accepting new patients covered by the plan. Over time, your number of patients covered by the plan will decrease as they switch to different plans or leave the practice and are replaced by new patients with better reimbursement.

What’s ahead
Dramatic annual increases in the overall cost of health care are beginning to meet resistance from employers and government, cost increases lag behind those in the hospital and pharmacy sectors, the pressure to contain overall costs will depress future reimbursement. Practices should assume that any annual adjustments will not be sufficient to keep pace with labor, malpractice and supply-cost increases and plan accordingly.

This means that, unless physicians want to work harder, they will need to generate more revenue for the work they now do. While accurate coding and complete charge capturing can play a key role, physicians should not hesitate to negotiate with health plans for fairer reimbursement. Practices that present a well-documented argument may be rewarded with a positive payer response.
Copyright © 2004 Elsevier Inc. All rights reserved.   www.mdconsult.com 
source: /das/journal/view/42214869-2/N/15078319?ja=442994&PAGE=1.html&ANCHOR=top&source= 

A state supreme court rules that "noncompete" clauses violate public policy by limiting patient access to medical care.
 

Dec 16, 2005 

By:  Berkeley Rice 
Medical Economics 

If you're hiring a new doctor—or if you're a job applicant yourself—the employment contract probably includes a "noncompete clause" or "restrictive covenant." This standard provision prevents the new doctor from practicing in the same geographic area for a specific time period after leaving the group. 

 Groups obviously favor restrictive covenants because they protect the group's patient base and its investment in recruiting and supporting the new physician. New associates, however, usually resent the clause, since it prevents them from earning a living in the same area if the job with the group doesn't work out. 

 Because of that inherent conflict, disputes over noncompete clauses often end up in court. A recent decision by the Tennessee Supreme Court highlights the continuing battle over these controversial contract provisions. Here's what happened in that case, plus what you need to know about dealing with restrictive covenants—no matter which side of the bargaining table you're sitting on. 

A noncompete battle in Murfreesboro 

When David Udom was hired by Murfreesboro Medical Clinic, a 50-doctor multispecialty group in Murfreesboro, TN, the internist's contract contained a typical noncompete clause that forbade him from practicing within 25 miles of the city for 18 months after leaving the clinic. The contract also contained a "buy-out" clause under which the restriction could be waived if he paid the clinic the equivalent of a year's salary, and reimbursed it for any moving expenses the clinic had paid on his behalf. 

 Udom signed the contract and began working at the clinic in September 2000. In August 2002, shortly before his two-year contract was about to expire, he was informed that it wouldn't be renewed, and that the noncompete clause would therefore take effect. 
 

Power Points 

When Udom met with plastic surgeon Daniel Scott Corlew, the clinic's president, Corlew told him that under the covenant's restrictions he couldn't practice medicine in Murfreesboro or its immediate surrounding communities. Nor could he accept a staff job at Middle Tennessee Medical Center, the local hospital, or at Murfreesboro's VA hospital—even though neither position would involve direct competition with the clinic for patients. In fact, Corlew told him, he would have to give up his admitting privileges at MTMC. 

 After consulting an attorney, Udom informed the clinic that despite the noncompete clause, he planned to open a solo practice in the town of Smyrna, about 15 miles from Murfreesboro. He also refused to pay the sum called for by the contract's buy-out option. The clinic responded by filing a complaint against him in state court, accusing him of violating the terms of the noncompete clause. 

 Following a hearing in January 2003, the judge declared the noncompete clause valid and binding, and issued a temporary injunction barring Udom from either opening a practice in Smyrna, or working at MTMC. The judge also ordered him to deposit $120,000 with the court to satisfy the buy-out clause, pending a resolution of the case. Udom took out a loan and made the deposit. But he appealed the ruling, and went ahead and opened his practice in Smyrna—with the court's permission. The appellate court later upheld the restrictive covenant, and the case ended up before the Tennessee Supreme Court. 

 In his brief, Udom argued that the covenant was unreasonable, overly broad, and "against public policy." In response, the clinic insisted that the covenant was legal and should be enforced to protect its patient base. Because of "the unique one-on-one relationship between a physician and patient," the clinic argued, many of Udom's patients might otherwise leave the group if he opened his own practice in the same area. The clinic also claimed a legitimate business interest in protecting its investment in Udom's recruitment, training, office space, and administrative support during his two-year employment. 
 

 The state supreme court rules for Dr. Udom 

 Last June, the Tennessee Supreme Court reversed the appellate decision, largely on the basis of "public policy." In support of its decision, the high court cited the AMA's Code of Medical Ethics, which states that free choice of physicians by patients, and unrestricted competition among physicians are "prerequisites of ethical practice and optimal patient care." Based on those principles, the Code specifically "discourages any agreement that restricts the right of a physician to practice medicine for a specified period of time or in a specified area upon termination of an employment, partnership, or corporate agreement." Such covenants, the Code states, "restrict competition, disrupt continuity of care, and potentially deprive the public of medical services." 

 The high court recognized that some state courts have found that noncompete clauses violate public policy by limiting patient access to medical care. Several other state courts have ruled that by preventing physicians from practicing in their own communities, restrictive covenants constitute "restraint of trade," thereby violating antitrust statutes. 

 For such reasons, Colorado, Delaware, and Massachusetts have passed laws specifically prohibiting noncompete clauses in physician contracts. Given those judicial decisions and legislation, the high court found it "curious" that a majority of the states still permit noncompete contracts between physicians as long as they meet a "reasonableness" standard. 

 Noting that Tennessee law already prohibits restrictive covenants among lawyers, the justices saw "no practical differences between the practice of law and the practice of medicine. Both professions involve a public interest . . . [and] both entail a duty on the part of practitioners to make their services available to the public. Also, both are marked by a relationship between the professional and the patient or client that goes well beyond merely providing goods or services." Those relationships are "dependent on the patient's or client's trust and confidence in the physician consulted or attorney retained," and "often require the disclosure of private and confidential information." In both contexts, restrictive covenants have a destructive impact on those relationships. 

 For those reasons, the high court ruled that a patient's right to freedom of choice in physicians—and to continue an ongoing relationship with a physician—outweighs the business interests of a physician's employer. As the justices explained, "The right of a person to choose the physician that he or she believes is best able to provide treatment is so fundamental that we can not allow it to be denied because of an employer's restrictive covenant. Were we to hold otherwise, many of Dr. Udom's patients would be denied the opportunity to choose whether or not they wanted to continue being treated by him." The justices concluded that noncompete agreements such as the one between Udom and the clinic are "inimical to public policy," and therefore unenforceable. 

 Pleased with his victory, Udom now has a busy practice in Smyrna, including a few dozen patients who followed him from his former group. He still has staff privileges at MTMC, and eventually got his $120,000 buy-out deposit back. (He declined to be interviewed for this article.) 

What this case means for practices and job applicants 

Despite this Tennessee Supreme Court ruling and similar court decisions and legislation in several states, restrictive covenants are still common in physician employment contracts. To be enforceable, however, the restrictions must be reasonable. According to the AMA's general counsel, that means the restrictions must be no broader—in duration and geographic scope—than necessary to protect an employer's legitimate business interest. They also must not be unduly burdensome to the physician employee, or harmful to the public interest—which courts generally interpret in terms of patient access to healthcare of their choice. 

 Noncompete clauses typically prohibit competition from departing physicians for two to five or more years after their employment ends. Geographic limits vary from 1 mile in urban settings up to 25 miles in rural areas where patients are accustomed to driving considerable distances to visit their doctors. One common rule of thumb is a radius that covers 80 percent of the group's patient base. 

 For groups hiring doctors, there's nothing wrong with including a noncompete clause in the contract as long as it conforms to the standards established by state law and case law, and the limits are reasonable. That judgment, however, requires the advice of a healthcare or business attorney who's experienced in contract law. As a general rule, attorneys warn that the broader the clause's restrictions, the less likely it is to stand up in court. In other words, advises Douglas Janney, the lawyer who represented Udom, "Don't be greedy." 

 When it comes to enforcing a noncompete clause, Janney sees a distinction between the rights of doctors who leave a group voluntarily, and those who are dropped, like Udom. "It's fundamentally unfair to hire someone, then fire him and try to preclude him from working in the same community, or forcing him to pay for the right to do so," says Janney. 

 Even in states where restrictive covenants among physicians are still legal, however, some medical groups hesitate to invoke them because going to court to stop a departing colleague from practicing in the same area can create bad publicity. For that reason, or if your state prohibits restrictive covenants, there are other legal options to consider that protect the group's interests if doctors leave. 

 One such option is a "nonsolicitation clause," which prohibits a departing doctor from approaching any patients he formerly treated as the group's employee. Another method is the type of buy-out provision that Udom's clinic used, which courts generally don't object to—if the amount is reasonable (see box). 

 For doctors who apply for jobs with a group, the major lesson from Udom's case is the importance of reading the contract carefully—not merely for the obvious topics like salary, hours, and call coverage, but all the fine print and subsidiary clauses as well. If the contract contains a noncompete clause, don't just sign it, hoping the group won't invoke it, or that a judge won't enforce it if a dispute arises later. In most states, it's still legal unless you can prove that the restrictions are unreasonable or, as in Udom's case, that they violate public policy. 

 The smart approach before signing the contract is to ask an experienced healthcare attorney or business lawyer to review it, and to find out if the noncompete clause conforms to state law and case law. If it doesn't, the lawyer can point that out, and try to persuade the group to delete or modify it. Even if it's legal, he may be able to negotiate better terms, such as narrower limits on where you can practice if you leave the group or on what medical services you can offer. 
BACK TO CONTENTS

Reprinted with permission from 
The American Journal for Nurse Practitioners
Fall, 1997, pp 34-35.
Even nurse practitioners who normally are confident and assertive become reticent, tachycardic, and diaphoretic when negotiating their own salaries. One method of reducing stress when confronting the salary issue is to focus on hard figures that document an NP’s monetary contribution to a practice and the costs of an NP to a practice. 

NPs bring in income on a fee-for-service basis or on a per-member-per-month basis. Figuring an NP’s share of income in a fee-for-service practice is done by multiplying the number of visits by the fee collected per visit. When a practice’s patients are capitated, an NP’s share of income is figured by multiplying the number of patients on an NP’s panel by the per-member-per-month fee coming into the practice. 

The cost of maintaining an NP is figured by adding practice expenses and the cost of physician consultation. Practice expenses can be estimated or calculated for a particular practice. For a solo practice, expenses can be 40% to 50% of income, whereas for a large practice, expenses are typically lower—20% to 30% of income. Practice expenses include rent, salaries, taxes and benefits for support staff, taxes and benefits for NPs, supplies, laboratory expenses, depreciation, car, continuing education, and insurance (malpractice, workers’ compensation, and premises). (Please see Let’s Talk Money on page 5 of the May/June issue of NP World News for a brief discussion of practice expenses.) 

An NP who needs a great deal of physician consultation should expect to compensate the NP’s employer physicians for their time. An NP who needs little consultation should command a higher salary, because he or she needs little of a physician’s time. Until NPs no longer need a physician on a written agreement, all NPs should expect to pay something for physician consultation. Experienced NPs often pay physician employers/consultants 10% to 15% of their net income brought to the practice. 

Most employers will want a percentage of an NP’s earnings as profit. An experienced NP who needs little consultation from an employer physician might consider his or her contribution to profit to be the 10% to 15% of net income paid for consultation as noted above. A newer NP should expect to contribute 10% to 15% of net earnings to an employer as profit, in addition to 15% to 25% of net earnings for physician consultation. To project an appropriate salary for a particular NP, it is necessary to 

calculate income to the practice based on NP billings; 
subtract 10% for unpaid bills; 
subtract 
the calculated figure for practice expenses (20% to 50% of earnings), 
the cost of physician consultation (10% to 20% of net earnings, and 
a percentage for employer profit. 
Fee-for Service Practices In a fee-for-service practice, an NP who sees 15 patients a day at $35 per patient visit, on average, brings in $525 a day. Allowing one week off for continuing education, one week for illness, and four weeks for vacation, this NP will bring in $120,750 a year, potentially. But not all bills are paid. With a 90% collection rate—a reasonable collection rate for an efficient practice—this NP actually will bring in $108,675 per year. 

An NP who sees 24 patients per day at the same per-patient rate, will bring in $840 per day, or $193,200 per year in accounts receivable, With a 90% collection rate, this NP will bring $173,880 to the practice. 

Deducting 40% of the NP’s gross generated income for overhead expenses (rent, benefits, continuing education, supplies, malpractice insurance, lab expenses, and depreciation of equipment) leaves $65,205 for the 15-patient-per-day NP and $104,328 for the 24-patient-per-day NP. 

Further deducting 15% of that figure to pay a physician for consultation services leaves $55,425 in salary for the 15-patient-per-day NP and $88,679 in salary for the 24-patient-per-day NP. 

Capitated Practices In a fully capitated practice, an NP who has a panel of 1,000 patients at an average fee-per-member-per-month of $10 will bring in $120,000 annually. There should be a 100% collection rate under a capitated system of reimbursement. Applying 40% to overhead leaves $72,000, and paying 15% for physician consultation and then 10% for employer profit, leaves $55,080 for the NP’s salary. An NP with a larger panel will make more. 

Are These Projections Accurate? One could argue about whether the percentages used here are correct. In fact, some practices have poor rates of collection, some practices have higher overhead expenses, and some physicians want more payment for consultation than the $9,780 per year for a 15-patient-per-day NP or the $15,649 per year for a 24-patient-per-day NP, and some employers want more profit than that which is projected here. However, a nurse practitioner should not be subsidizing a poorly run practice nor should he or she be overcompensating a physician or employer. And, many practices receive more than $35 per NP visit, on average. In these practices, the NP’s salary should be proportionately higher. 

Reported Median NP Salaries Comparing these calculated NP salaries with some of the recently reported median salaries for NPs is an interesting exercise. Some large medical groups are using the Medical Group Management Association’s median salary data for 1995. As reported in the February 1997 issue of Clinicians Review, the median NP salary for 1995 was $49,200. The median primary care physician salary was $133,322. According to another 1995 salary survey, the median salary for an adult nurse practitioner was $49,143. These data come from Nurse Practitioner Support Services, as reported in the December 1996 issue of The Nurse Practitioner. Rumor has it that NP salaries are being driven downward by an oversupply of physicians. According to the rumor, physicians are willing to take such low salaries that hiring an NP is no longer cost-effective. There is no evidence that anything like that is actually happening. Salaries for primary care physicians have continued to rise. Therefore, an NP at $50,000 to $70,000 is still a bargain, compared with a physician at $100,000 to $140,000. "NPs are half-price"! said one clinic director who hires NPs and physicians. 

Embarking on a Salary Negotiation 

An NP embarking on a salary negotiation needs to gather the following data from the employer: 

What is the most frequently billed CPT code for the practice? What amount does the practice bill and receive, on average, for that CPT code? 

What is the percent of practice income that goes to cover practice expenses? If the employer is not willing to reveal this information, ask how many providers share practice overhead expenses. A solo practitioner pays 43% of income for office expenses, whereas a group practice of 10 to 24 doctors pays 23.5% for office expenses. Armed with this information, determine the appropriate rate to deduct for practice expenses. 

What is the collection rate for the practice. Remember, 90% is good. 
How many patients is the NP expected to see per day? 
After obtaining this information, the NP needs to make the following assessments about his or her speed and comfort level: 

How many patients can I see per hour, day, month, or year? 
How much physician consultation time will I need a 10-minute consultation on every patient, a 5-minute consultation once a day, or a 5-minute consultation once a week, or once a month, or once a year? 

The "New" NP What can a newly graduated NP without experience expect? A newly graduated NP may be able to see only 10 patients a day, with four or five 10-minute consultations with a physician per day for the first six months. Plugging in the figures as in the examples above, the NP will bill 2400 visits per year (two weeks vacation for the new grad) at $35 per visit to total $84,000 in accounts receivable. With a 90% collection rate, the new NP will bring in $75,600. Deduct 40% for office expenses, which brings the net income to $45,360. 

Because a new NP often requires significant consultation time with a physician or with an experienced NP, deduct 25% for payment for consultation, bringing the new NP’s salary down to $34,020. With a 10% contribution to employer profit, this new NP’s appropriate salary is down to $30,618. 

After six months, when the same NP becomes more comfortable and more efficient, the income number should double, and consultation requirements should decrease, so that the appropriate salary would more closely approximate the salary of the 15-patient-per-day NP, and eventually the 24-patient-per-day NP, used in the examples above. Many employers start a new NP at a salary significantly higher than $30,618, expecting that low productivity in the first six months will be balanced by high productivity the second six months. 

The Experienced NP Experienced NPs who are seeing more than 15 patients per day at CPT code level 99213 or higher should be making at least $50,000 per year. If not, there are inefficiencies in the practice or the NP is not sharing in the profits. One final suggestion for NPs who think their salaries are too low. Show this article to employers and ask for feedback and let us know what you hear. 

(Editor’s Note: This article "Negotiating Salary" by Carolyn Buppert was originally published in the July/August issue of NP World News. We received many favorable comments about the article and requests for reprints. For readers who missed the article in NP World News, we are reprinting it here.) 

source: 
https://www.npjobs.com/ajnp.salary.negotiation.shtml
https://www.nurse.net/cgi-bin/start.cgi/salary/index.html#all

PA On-Call Reimbursement: Jerry M. Parsons, PAC/ATC

I think what you will find is that the reimbursement for PAs in Ortho who take call range from nothing (part of their salary) to very well. As far as expectations of what the PA does for coverage (pt. calls, ER calls, floor calls, rounds, surgery, etc.) also varies. There is no one good answer for each situation. I think you have to get a feel for what is common in your area. I would recommend that whatever you decide, you try to minimize your availability. It seems that the trend is for PAs to do more and more for call coverage and the pay seems to be minimal. Most surgeons are now being compensated to take call which is all the more reason to ask for you fair share based on the work you do.

I would organize a meeting among your PA colleagues as soon as possible and discuss the issues. Then you can go as one voice to the group with your thoughts. I know several years ago we caught wind of a possible addition of call responsibilities and had a meeting to discuss our concerns. When we met with the physicians it sure helped to be speaking from one voice. They decided at that time not to use us because we had decided we really did not want the extra work and in a way to discourage our use, settled on $50 per hour to be available for call or basically $600 for 24 hours. I think that is a fair amount in our economy to discourage overuse of our services. You might even consider asking for compensation time off the next day as part of your request

Additionally, I would recommend that you not receive calls from patients of the group and use liability as the reason. I believe the group is overextending its liability by asking the PAs to do this. Also, I would limit your duties to triaging the ER, receiving calls from the hospital floors, and assisting at surgery while on call. All calls from outside (non-local) hospitals and other physicians should go the the surgeon. As for rounds, I would avoid that like the plague. You should only be doing rounds on your supervising physicians patients and those should be shared, at least every other day the surgeon should be seeing their patients.

Jerry M. Parsons, PAC/ATC

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