Contract negotiations

[turn444]

I am a partner in a private group that contracts to provide ER docs to the hospital system.  Historically, the hospital has always managed the billing and collections and have contracted with us for a set fee/hour paid to the group account monthly.

Recently, they wanted us to have some "at risk" money based on certain agreed upon departmental metrics.  That money is paid once a year and is also on a per hour basis.

Now the admin would like to base our "at risk" money on the Hospital System as a whole meeting its projected margins.

Obviously we don't mind the at risk money for the metrics we have direct effect on, but we have no direct way to influence the hospital systems projections and/or whether they attain them.

They want this to be all or nothing.  Even if we hit all our metrics we would get nothing if the hospital system doesn't meet its margins.

Has anyone else found this particular arrangement?

[q-school]

As an employed physician, some of my salary is at risk for system wide metrics that I have no direct control over.
One of those includes hospital profitability.

I'm sure they all read the same instruction manual.

[turn444]

Is your practice purely clinical?

[childay]

Ok so obviously that sounds crappy!

What exactly is the proposed hosiptal-wide bonus?  By margins I assume you mean profits?  Hopefully not "meeting budget" because in my hospital at least that is a completely nonsensical made-up estimate that they pull from you know where..

[turn444]

It is indeed for meeting their projected budget.

Here are the possible scenarios

1. We hit our ED metrics and the hospital system meets its projected margins(budget) = we get our at risk bonus

2. We hit our ED metrics and the hospital system does NOT meet its projected margins = we get NOTHING

3. We don't hit our ED metrics regardless of how the hospital does = we get NOTHING

Notice there is no option for a BIGGER bonus if we meet our metrics and the hospital exceeds their margins.

So, all risk, no reward for that risk.

 

[pulmdoc]

What are they giving you in exchange for making some of your compensation "at risk?" Higher base pay? Trips to Hawaii for the COO of your group? My bet is that they are trying to get something for nothing. What happens to your satisfaction with the contract if the "at risk" money doesn't materialize?

[SValleyMD]

Ugh. Sounds horrible. Haven't seen that before.

I hate that we (physicians) allow any "at risk" money whether we can theoretically control it or not.

Obviously I would try and fight that tooth or nail.

[The White Coat Investor]

Worth fighting, but obviously the big risk is that they give the contract to EMCARE or USACS or TEAMHEALTH or something instead. Perhaps better to take a little pay cut (which is what is most likely here) than lose the contract all together. Good luck in the negotiation.