Tips for contracts for new orthopedic surgeon

[Heartsmart]

What should an orthopedic surgeon coming out of fellowship look for in a contract when considering full time employment with a hospital system?
How realistic is an incentive after a base salary of receiving an additional 40 % of net collections exceeding 600,000?

[Nysoz]

So $600k is your base and any RVUs past that you get 40% of collections? What's MGMA average for your area? Whats your target/goal RVUs? Is it attainable? How many are the other orthopedic surgeons getting? How long is your income guaranteed for? What happens if you don't meet your RVU target?

Do you have a non-compete clause? How enforceable is it in your location?

Look at other things like how many vacation/CME days you get, any CME money.

Do you get a sign on bonus? Relocation help/bonus?

Look at tail coverage for malpractice.

Pretty sure I'm missing some stuff as well, consider a contract lawyer/review to look it over as well.

[Heartsmart]

Sorry,
Base salary 420,000 with 20,000 signing bonus.
Incentive is not RVU but based only on net collections. Will get the incentive of all NET COLLECTIONS over 600,000. (40% of collections over 600,000)
Just not sure whether that is realistic as it is based on the collections, not billed or RVU- thus based on insurance mix and payments.
Noncompete is standard.
Area is HCOL
Vacation pretty standard

[abds]

What does NET collections mean? What are they taking out of your gross collections to get to the term net collections?

[Nysoz]

You should be able to ask for the current orthopedic surgeon numbers or at least a sample. Just have them make it anonymous if there's a concern. Worst they can say is no.

[Tim]

1. Add employer retirement contributions and benefits that are of value.
2. MGMA has billing and collections data. What they don’t have is your net (billing mix, write offs and charitable).
3. Your goal is predict how long it takes for you to ramp up and what to expect.
With any incentive system, the referral process is significant. How fair is it? You can bet your sweet tail the other ortho’s will try to maximize their collections. Depending on your sub specialty, they will want to keep the cherries and refer all pits directly to you. Every ortho seems to think they are the best from foot to shoulder at any age. They will not give you profitable business and will claim when possible.
4. Because of the ramp up building your practice, keep in mind where you will end up in year 3 (next contract) if this is a two year deal.
5. You want every piece of data wrvu’s, billings, collections and your clinic location are pieces of the puzzle.
6. Marketing, staffing and OR access (block time when you are busy enough) greatly impact you. They can make you busy and efficient or leave barriers in your way.
7. Malpractice tail coverage can be significant.
8. What is a standard noncompete?
9. You have a private practice model within a hospital system.
10. Get a contract review, the MGMA data compared to the hospital data is used to project realistic numbers.

[Medstud21]

What should an orthopedic surgeon coming out of fellowship look for in a contract when considering full time employment with a hospital system?
How realistic is an incentive after a base salary of receiving an additional 40 % of net collections exceeding 600,000?

Depends on your payor mix. You should ask the existing orthopods in the group. Also, what happens when the initial guarantee is over? How much of collections do you keep. What’s the realistic number? Existing partners should be able to tell you that.

[DrRab]

I have no experience with hospital employment, but the devil is in the details as with anything. The base salary is not as important IMO as figuring out how much volume and need there really is for your position. If the guarantee only is for one year, which is common in PP jobs at least, then you have to be able to ramp up quickly to support yourself once the guarantee is done. Collecting 600k in your first year sounds difficult unless there really is a large hole you're going to be filling in.

[Tim]

Sorry but adding another unknown.
• The call schedule and ER Level will play into this. Starting out, call and ER get you started.

Level 1 in a busy trauma center will always generate demand for Ortho.
But net collections or payor mix from this work can be different from the elective revenue streams.
You may do a lot of work that is valued for your base comp but not for your bonus comp. Typically you get paid for the call and for work performed in an incentive plan. Might want to poke for info on what to expect.

[JWeb]

Your first step is to find out what "net collections" actually means.

A 600k threshold of gross collections is fairly low. You'll likely have no problem collecting well over that your first full year. But net collections is different.

The payer mix will matter a lot for you. And I mean a lot. Also, you'll have to rely on a hospital system to do your billing/collecting. That will not be ideal.

A base salary with RVU based reimbursement would be much more ideal for you.

Definitely talk to the surgeons who are already there to get their insight/numbers.

Good luck.

[chocolatebear11]

I thought net collection usually means everything minus technical component (x-rays, imaging, etc), costs of goods, facility fees, or durable expenses. I guess its different for each.

Ophthalmology contract's bonus structure is usually 20-30% of net collections 3 times the base salary (200-300k)

[JWeb]

I thought net collection usually means everything minus technical component (x-rays, imaging, etc), costs of goods, facility fees, or durable expenses. I guess its different for each.

Ophthalmology contract's bonus structure is usually 20-30% of net collections 3 times the base salary (200-300k)

It probably means gross collections minus (DME, Xrays). It should not include costs of goods, facility fees (these are not part of "gross collections", facility fees will go straight to the hospital, not the surgeon), or durable expenses. Costs of goods (like injection meds) and expenses are part of overhead. That's why he/she only gets 40% of collections because the other 60% goes to overhead. Although, that's a high overhead so I'm sure the hospital is keeping some of that money. . .

As I said, the first step is defining net expenses.