10 Potential Time Bombs in Your Employment Contract

Leigh Page


October 22, 2015

In This Article

3. You'll Be Paid on the Basis of Your Productivity

Many hospitals insist on productivity-based compensation because they don't want a repeat of what happened in the mid-1990s. Back then, newly hired doctors, put on a straight salary, stopped working as hard. One contemporary survey[2] showed that primary care physicians' productivity declined by 15%-20% two years after a hospital acquired their practices.

Twenty years later, hospitals strive to avoid such declines by basing a large part of the salary—and bonuses, too—on the amount of collections from your patients or on the relative value units that you produce.

"A lot of doctors say, 'I work hard, so I don't mind being paid on a productivity basis,'" Hursh says. But, in fact, it may be impossible for them to meet the productivity targets, no matter how hard they try.

That's because employers may set targets too high. Typically, they use benchmarks provided by the Medical Group Management Association[3] and other sources, but those levels may not take certain peculiarities of the organization into account, such as demanding more nonclinical work (serving on committees, for example) than usual.

In other contracts, the employer may base productivity on collections, which may be disappointingly low, Gosfield says. For example, a hospital billing office isn't geared to billing for a private practice. Gosfield had a client who was collecting 55% on the value of his billings when he was in private practice, but the rate fell to 29% once he become employed. Rather than be based on collections, she says, productivity should be based on your documented encounters with patients.

Even when the productivity measurement is fair, the employer may not provide you with an adequate patient load to meet that target, Hursh says. "If the hospital went from employing no orthopedic surgeons to employing five of them, it might not have enough patients for all five," he says. Having to split up limited volume five ways might mean that none of the orthopedic surgeons gets a productivity bonus.

Patient volume may also fall because the employer has walked away from contract negotiations with a key insurer or is excluded from a narrow network, Stadler and Gosfield add. If volume falls owing to the employer's own actions, the contract might require that the productivity target be lowered.

Because of the uncontrollable aspects of productivity, Gosfield recommends limiting its role in your payment formula. You should demand a guaranteed minimum, no matter what. "This provides some security when high productivity is outside of your control," she says.


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