What items are negotiable when you’re considering a physiatry practice opportunity?  Let’s start at the beginning and that’s with the salary.  This is the biggest financial part of your package so this is the one that is most important and can be negotiated.

The start date may be negotiable.  If you’re a newly graduating resident and want to take off July and some of August to take the Board exam, many entities are OK with this later start date.  Sometimes you actually will start later than you wanted because of the time to get a license and credentialled.

Your work schedule may be negotiated if it works out best for you and the entity.  Requests for weekend hours or night time hours maybe very welcome or not at all possible.  Obviously, this request is very dependent on the nature of your work responsibilities.

A sign-on bonus is not often the case.  However, it’s something worth asking for.  The worst the entity can do is say no.  The same holds true for loan forgiveness and professional dues.

CME is often provided but you may choose to negotiate how much is provided.

Relocation is usually provided by large corporations and hospitals but not private practices.  The tax implications of how you’re paid for relocation are important.  For more information on these implications, visit https://www.holmanmoving.com/Moving/moving-guide/how-to-manage-your-lump-sum-employee-relocation-pa.aspx

Restrictive covenants are requirements that as a physiatrist working within an entity that you can not practice in a local area for a set number of years after you leave that entity.  The language is included in your agreement with the entity.  They vary from entity to entity.  Restrictive covenants are to protect the entity from you usurping their patients, which you would probably also want to guard against if you were in their shoes.

I’ve heard that they usually don’t hold up in court but that the time and expense to take it to court are usually not worth the bother.   Of course, you should ask a lawyer for further information.

Some examples of them follow:

• NC – Can’t practice in the county for 1 year
• FL – 20 mile radius for 2 years. For another FL practice –same county for 1 year. 25 miles for 2 years
• PA – 25 mile radius for 2 years, county for 1 year
• NJ – 20 mile radius for 2 years
• National company – 10 mile radius for 1 year

I’ll never forget a doctor who I recruited to a practice who was frustrated by how much the practice paid in rent and, more so, how much his share was! There are so many expenses to consider such as staff salaries, computer expenses, benefits, furniture, equipment and insurances.  Therefore, it’s important to get all the expenses outlined in the partnership agreement.

As it’s a partnership agreement, it should include information about how the partnership works such as how many shares you’ll receive.  All the other terms of partnership should be considered such as how the practice is run.  You need to get all the answers to the following questions and more and they should be included in the agreement.  Which decisions require a majority vote?  Who has check writing authority?  How are partners added or dismissed?  How would a merger request be handled?

The partnership agreement should also spell out the financials of the partnership.  Answers to these questions and more should be in the agreement.  How much you would receive if the practice dissolves?  If you leave or when you retire, how much you will receive?  Typically, the payment is based on the shares you have and the value of those shares, e.g. the practice’s tangible assets like furniture and the intangible assets like accounts receivable and debt.

Taken from https://www.physicianspractice.com/employment/understanding-physician-employment-and-partnership-agreements/page/0/1

Partnership or shareholder agreements should define the practice’s legal structure: sole proprietorship, partnership, professional corporation, limited liability corporation, or hybrid. It will also spell out terms of the buy-in, or how much you are required to pay to become an equity owner. The size of the buy-in depends on the overhead; the lower the overhead the lower the buy-in.  Some practices bait physicians with a zero or low buy-in price in exchange for a reduced salary during their years of employment. “The partner is, in effect, prepaying their buy-in,” says Jack Valancy, a practice management consultant. “Rather than charging you $40,000 for the buy-in, they charge you a nominal amount and pay you $140,000 a year instead of $160,000. But what happens if you don’t reach partner? You want to be sure you’re fairly compensated for the work you are doing.”

Partnership is and has been a valued professional goal.  I always thought of it as a positive until a practice manager told me that it’s not always the best thing because a practice may be in the red.  Therefore, it’s important to see the financial reports of the practice.

Unfortunately, partnership terms are rarely discussed at the outset when you’re joining a practice.  Practices don’t typically divulge this information because they want to wait a few years to see if you and the practice are a good match.  Typically, asking for partnership terms while you’re interviewing is like asking for a marriage certificate while you’re just dating.

All that being said, you should try to get your employment agreement to include the timetable and terms of partnership.  You should know and have in writing what the purchase price is based on, how it will be paid, the percentages associated with the buy-in and the terms of a buy-out.  Sometimes there’s not a buy-in but instead the salary is lower. Partnership also involves responsibilities such as voting power.  If you don’t have voting rights, then the partnership is not a true partnership.

All of what’s necessary to be on sound footing for the partnership terms may be a bit touchy to address with the practice.  Here’s where your lawyer can come into play and ask for more information and question any unclear points.

1. Physician work RVU = the level of time, skill, training and intensity to provide a given service.
2. Practice Expense RVU = Addresses the cost of maintaining a practice including rent, equipment, supplies and non-physician staff costs.
3. Malpractice RVU = Represent payment for the professional liability expenses. These are supposed to be reviewed on a bi-annual basis, but in practice this has not frequently occurred. This is the smallest component of the RVU.
Each CPT code is targeted for review at least every 5 years. Historically, a group of codes appear to be targeted each year by Medicare in order to reduce the amount reimbursed. Rarely do we see increases. This is for Medicare, Medicaid and Medicare Replacements. In the case of EMG’s a few years ago, the actual CPT codes were changed by the AMA as well as the definitions, allowing Medicare to assign completely new RVU’s rather than adjusting them, resulting in a whopping 50% decrease.
Another factor that is applied is the GPCI (Geographic Practice Cost Indices). This takes into consideration the cost of living differences across the country. CMS calculates an individual GPCI for each of the RVU components, i.e., physician work, practice expense and malpractice. The GPCI’s are reviewed every 3 years.
The Conversion Factor converts the RVU into actual dollar amounts. This is updated every year. This is what controls budget neutrality. There is a certain Budget amount allocated for reimbursement of Federal Funds every year (when there is a budget). If the expenses exceed the Budget, then the conversion factor is adjusted to achieve Budget neutrality.
When looking at practice RVUs it can become very complicated, especially for non-Medicare RVUs where the conversion factors are different from Medicare. Each practice can literally come up with their own RVUs, but you also have to know what the conversion factor is to turn the RVUs into a dollar amount. The safest way to proceed in that direction is to ask what their Formula is for calculating the actual dollar amount for each procedure. Then compare with each practice you is looking at.

Contributed by Elizabeth Lee, President
Physiatry Reimbursement Specialists, Inc.
A National Company serving Physiatrists all over the U.S. for 25+ years
Fort Worth, TX
1-800-324-4777
www.Prsinc.com

RVU Incentive

The RVU formula is:

RVU = Work (technical skill) + Practice Expense/Overhead + Malpractice Cost x a Conversion Factor

A physiatry billing consultant advises against RVU-based reimbursement arrangements if possible.  However, it seems to me a logical extension for entities to use RVU compensation as it reflects the formula used by Medicare to pay them.

An example of a RVU-based salary formula is:

RVU + Value (Achievement of Performance Criteria) + Advanced Practice Supervision + Other revenues

Some RVU incentive examples are $30/RVU after contract minimum (65th percentile for academic centers is around 5800 RVUs for 1 FTE).  For an outpatient job in New England, the RVU reimbursement is $40/wRVU over 5100.

For an interventional job in New England, the RVU reimbursement is $40/wRVU over 5400.

For an inpatient/outpatient job in the Midwest, the reimbursement is $56/wRVU.

Another example is in the Midwest, there there are 3 tiers.  Tier 1 is for 1 – 4,523 wRVU with $51.40 paid/wRVU.  Tier 2 is 4,524 – 5,815 wRVU with $52.99 paid/wRVU.  Tier 3 is 5,816+ wRVUs with $54.63 paid/wRVU.

Keep up on the Physiatry industry with Farr Healthcare. We cover everything from hiring trends to compensation. If you are interested in contacting us you can reach us farrhealth@comcast.net or fill out a Physician application or employer contact.

RVU-Based Bonuses

RVU-based bonus? Depending on the payor mix, either the practice or the employee may be shortchanged. In practices with a lot of self-pay (often becomes no-pay), the practice may be shortchanged because a certain level of RVU’s (i.e.-production) will result in lower practice income. In practices with a payor mix of traditional high-reimbursing carriers, the employee will be shortchanged because the same level of RVU’s (i.e.-production) will result in higher practice income.

I prefer income-based bonuses. The more or less income the practice earns based on the employee’s services, the more or less bonus the employee gets.
Also, to base a future bonus on current base-year RVU’s gives an incentive to the employee to work less in the current year, thereby raising the RVU-percentage increase for the next year. By the same token, it gives the employer an incentive to overload the new employee with work in the current year, making future year RVU-percentage increases relatively lower.
In summary. I like income-based bonuses WITHOUT REGARD to prior year income. What does one year have to do with the next? The RVU-based bonus looks like a way to “incentivize”the employee, but it is not based on actual income, only some theoretical calculation of work. It can be restated this way: Pay me based on what income I generate, not the number of hours (which will increase RVU’s) I work.
In addition, in this PM&R job market, the employee is in a good position to negotiate more favorable compensation terms.
This article Was contributed by Bruno Stillo, Physiatry Billing Specialists. 800-836-4482,  physiatrybillman@aol.com

RVU’s for Physiatry – Should We or Shouldn’t We!

The following advice was provided to the question of whether a practice should use RVU’s as a basis for payment to a new doctor:

RVUs correlate to CPT Codes, which correlate to income.

RVUs are good for physiatry employees whose PM&R practice has low-reimbursing insurance carriers, like Medicaid. In this case, the lack of reimbursement will not unfairly penalize the physical medicine and rehabilitation employee who is working hard, but does not receive correspondingly high reimbursement. In other words, their RVUs will be high, but their reimbursement will not be as high.

But, all things being equal, RVUs translate to reimbursement.

RVUs only confuse the physiatry employee. Using them is awkward, not well-understood, and confusing.

Better to stick to dollar incentives, which is understood by all.

This information was contributed by Bruno Stillo, CPA, MBA, Physiatry Billing Specialists, 800-835-4482,
www.physiatrymedicalbilling.com
physiatrybillman@aol.com

Some incentive arrangements are based on the achievement of reaching a certain dollar amount of collections and then paying a percentage of receipts thereafter.  For example, one position that has inpatient and outpatient work pays a salary for the inpatient work but for the outpatient work has an incentive formula based on productivity where during the first $50,000 in collections, the practice pays 50%.  Then for the collections over $50,000, the practice pays 65%.  Another example is an interventional practice that pays a doctor 5% of his/her collections exceeding $750,000 during the first and second years, and 10% of collections exceeding $750,000 during the third year.  These examples demonstrate the difference in incentive arrangements based on the type of services provided.

It’s that time of the year when many physiatrists are considering a contract. There are many parts of the PM&R contract that maybe negotiable so take the time to review the contract for items you may want to negotiate.  Also many parts of the contract may require further delineation to protect you.

Contract Term

Beyond stating the actual term of the physical medicine and rehabilitation contract, what are the terms for continuation and termination?  Usually the time of the term is stated in the beginning of the contract and then you have to look elsewhere, often at the end of the contract, for more information.  What happens at the end of the physiatry contract term?  When will discussion about contract continuation occur?  If renewed, will the contract include the same terms or be open to discussion about new terms?  Watch for requirements placed upon you to, for example, live within a certain radius of the hospital, carry a specified dollar or type of malpractice insurance, abide by “current and past policies” (what are they?).   Most contracts have language to the effect of “may be terminated immediately for professional misconduct.”  What does this mean? Make sure the terms of termination are not one-sided.

A great resource may be found at Physician Employment Contracts – American College of Physicians

A letter of intent is not a substitute for a PM&R contract.  The bottom line of contract negotiation is that you have your lawyer review the contract.  Some physiatrists use their lawyer as their negotiator.  I think it depends on your comfort level with the contract and contract negotiation and if your employer is using a lawyer as its representative.  Our website, www.farrhealthcare.com, lists some lawyers under the Resources tab.

More information about physiatry contracts will follow in subsequent posts.