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Cost of Living Adjustments in Employment Contract - Do you have one?

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  • Cost of Living Adjustments in Employment Contract - Do you have one?

    My contract has a base + production bonus but the base is fixed with no increase with time in the position and no cost of living adjustment. Members in my group who have been with the group for 15 years still get the same base. It seems like a terrible plan to increase exposure to production based risk over time. The whole point of being salaried is to avoid the stomach churning of not having a reliable paycheck.

    Among salaried physicians, is this common? Anyone else in the same boat?

    More importantly, has anyone convinced an employer successfully to add a cost of living adjustment to their base salary?


  • #2
    The employed guys I know typically have a base that does increase until it hits a cap at 5-7 years. This rewards the older and established guys a tad but these all come with caps to ensure salaries don't climb too much .. A place I interviewed at offered a base at 400, 25k increase a year until capped at 525k)

    Irregardless it seems like any battle like that is tough unless u have unity from all the docs and an established guy leading the charge.


    • #3
      I believe that this is very common. Just speculating, there are probably several reasons for this, and none of the below might be the answer in your example.

      1. Physician salaries are generally high, much higher than needed to maintain a middle class lifestyle. COLAs are generally in place for those that are just scraping by (union workers, social security recipients, etc.).

      2. Physician compensation is generally trending downward, at least for the amount of work performed, especially in the specialty areas. Why would an employer want to bake in more compensation in a field where the amount of revenue generated to pay that employee is trending down?

      3. A young physician will probably naturally get more productive over time (with a ceiling, of course), especially in the early part of his/her career, thereby giving him or her natural raises in the contract above.

      4. An older physician may get less productive over time. With COLA raises, he or she receives higher compensation even with declining production.


      • #4
        Unfortunately young physicians seem to expect HUGE starting salaries and  increases.  This is really unsustainable over the long term.  I say this because CMS and insurance carriers are lining up to cut reimbursements.  If they cut reimbursement say 25% on your most commonly performed procedure then your salary will be readjusted downward.  I have seen this happen in my career.