Negotiating your first physician contract can be daunting, especially when faced with complex compensation models and legal jargon. One common point of contention arises when discussing fair market value and how your compensation is structured, particularly in hospital-based practices. This often leads to questions about resources like MGMA salary data and its relevance to your potential earnings. Let’s break down a common scenario and explore how student doctors can better understand physician compensation.
Imagine a physician, two years into a hospital-based practice, entering contract extension negotiations. They raise a valid point: their procedures generate higher facility fees for the hospital, suggesting a potentially higher base salary. However, the hospital administration pushes back, citing Stark Law concerns and fair market value limitations, implying they cannot compensate the physician beyond a certain “fair” level, regardless of the revenue generated within the hospital setting. Is this a legitimate concern, or a negotiation tactic?
It’s crucial to understand that hospitals may indeed attempt to suppress physician salaries, aiming for maximum productivity at a lower cost. The Stark Law, designed to prevent physician self-referral, can be misconstrued or strategically employed by hospital administrations to justify lower compensation. The term “fair market value” itself becomes a point of ambiguity. It’s not simply a matter of referencing the 50th percentile of salary surveys.
Hospitals often engage external consultants to establish compensation ranges, but these ranges are frequently kept confidential. The initial offer presented to the physician often sits at the lower end of this undisclosed range. So, how can physicians, especially those early in their career or even student doctors preparing for their future, navigate this landscape?
Several compensation models exist, each with its own implications:
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Straight Productivity (wRVU based): Compensation is directly tied to work Relative Value Units (wRVUs) multiplied by a conversion factor. This model is transparent and directly rewards productivity. MGMA data often provides median $/wRVU figures, offering a benchmark for fair conversion factors.
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Base Salary + Productivity: This hybrid model provides a base salary for security, with additional compensation triggered once a certain wRVU threshold is met. Understanding MGMA data helps determine a reasonable base salary and appropriate productivity targets.
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Base Salary Only: Less common in productivity-driven environments, this model may lack incentive for higher output, which administrations often avoid.
Hospitals may also utilize stipends for roles like clinical site directors or other administrative titles to supplement cash compensation, adding complexity to the overall package.
For student doctors and residents approaching contract negotiations, the key takeaway is to determine your desired total cash compensation. What number will make you feel fairly valued and motivated? Armed with this target and an understanding of MGMA salary data relevant to your specialty and location, you are better prepared to negotiate effectively. Researching MGMA data as a student doctor provides a crucial foundation for understanding salary expectations and advocating for your worth when the time comes to negotiate your first contract and beyond.
Hey guys regarding the MGMA data, is it different for hospital based practices? I am 2 years into a hospital based practice and currently undergoing contract extension negotiations with my employer. I brought up the point that since I am doing procedures in a hospital setting (higher facility fees for them) that my base should be higher as my bonus is wRVU based and not collections based (which I realize is appropriate for most hospital based practices). Their response was they can’t consider my work/collections in the hospital as this violates Stark laws. They also said giving me a higher base and compensating me “higher than fair market value” is also potentially problematic for them if they are audited. I am not sure if they are trying to get out of paying me or if what they are saying has merit to it. I do not have much experience with contract negotiations but if anyone has any input it’s much appreciated!
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The hospital is absolutely trying to get out of paying you. Typically they want 75th percentile work for 25th percentile pay. Generally, hospital administration has a poor understanding of how the Stark Law applies to employed physicians.
In general, they cannot pay you more than your collections, from what I understand.
The term fair market value will get thrown around a lot as well also. This phrase is poorly defined in my experience as it is not as simple as stating it is 50th percentile on one of the numerous salary surveys.
What can happen is administration hires am outside consultant to determine a compensation range. Administration will use this information and make you an offer, usually based on the lower end (you will never know what the range is since they will never divulge this).
There are a couple of ways to approach this (not exhaustive list) 1. Straight productivity model WRVU x conversion factor = compensation This is simple. Someone posted some mgma data which lists the median $/rvu
You should have detailed knowledge of your rvus for your 2 years.
Base + Productivity Usually you will have to meet some rvu threshold in order for Productivity to kick in.
Only base with no productivity I don’t see this too often because administration is typically afraid one will have no incentive to work etc.
Then there can be various stipends (clinical site director, other made up title) they can use to pump up your cash compensation.
Regarding your negotiation, what final cash compensation will make you satisfied? That is the number you need to think about in order to negotiate with an end goal in sight.
