The group’s story: facts and dynamics
This unique group of three interventional radiologists, each making a substantial income, found themselves in a situation where their compensation was not commensurate with their contributions. Their pay structure had not been updated in eight years. According to our analysis, each was making good money, but the pay was not fair (over $700k) by market standards. They were paid on a 1099 basis, paid their malpractice insurance, and had no paid leave (they were 100 percent production). They were paid per wRVU they produced and 15 percent of an infusion center’s profits. The medical director was also paid an additional $60k annually for the administrative time he allocated beyond his clinical duties. Despite the challenging circumstances, each interventional radiologist consistently produced at a level that exceeded the 90th percentile of the recent MGMA study. This is a testament to their unwavering dedication, high productivity, and undeniable value within the group.
Other group concerns
- Compensation
- Call
- Burnout and staffing
- Two-year renewal and renegotiation instead of eight years
- Malpractice coverage and how it was being paid/reimbursed
Challenges
Often, the administration feels that having a third party can delay the process, put a wedge between their physicians and themselves, or simply be too successful and cost them more than if the physicians were doing it themselves. The administration took the following positions:
- The physicians were already highly paid.
- The facility’s compensation structure was similar to that in other facilities in other states, and the administrators felt the compensation was reasonable for the physicians in this location.
- Administrators know they have the advantage if they work with busy physicians who are easily distracted and may need help knowing what to ask for or have the correct information.
The physicians, feeling the weight of the process and their disadvantage, were eager to hand over the negotiations to a third party with expertise in contract negotiations.
Leveraging third-party expertise in compensation strategy
We thoroughly analyzed both sides—what the radiologists wanted and what the facility could do. We determined the “fair market value” for the group in this particular location. Mediation with the facility was essential, as most physicians are not prepared for this process, either from a time or knowledge standpoint. The latest physician compensation information from local, regional, and national levels was able to bridge the gap and facilitate a successful negotiation. The negotiation process was designed to be a win-win for all parties involved—the facility, the community, and the physicians. This collaborative approach ensured that everyone’s needs and concerns were addressed, fostering a sense of inclusivity and mutual benefit.
Results
The facility agreed to increase the conversion factor by a small margin so the physicians could be paid more, and we increased the physicians’ profit share percentage by 5 percent to 20 percent. Provided production and profits remain the same (every year, not just once), this would result in a net gain per physician of around $112k annually. The facility was also agreeable to renegotiate in 24 months and change how the physicians were reimbursed for malpractice insurance, saving them additional headaches, time, and money.
Key takeaways
- Physician employers: partners, not adversaries. They want physicians to be satisfied with their compensation arrangements.
- There is already a shortage of interventional radiologists, and the number is expected to worsen. The replacement of interventional radiologists poses financial, health care, and community challenges.
- Administrators may try to take advantage of physicians’ lack of business savvy. A common tactic is to single a physician out and offer a “sweetheart deal” to get the group to sign a lesser deal.
- Even within the same group, physicians cannot decide what they want and have no clue what is “fair.”
- Often frustrated and underappreciated, physicians can find solace when their compensation is fair, a sentiment that physician employers may not always be aware of.
- Physicians are busy, overwhelmed, and skeptical. Despite their dedication to medicine, many physicians need updates to enter into long-term agreements. This lack of clarity can lead to uncertainty and a feeling of being in the dark about their contracts, which could be improved with precise and updated agreements. Physicians have difficulty agreeing on patient care, let alone what they want, which would improve their lives.
Conclusion
This case illustrates the importance of preparation, unity, and strategic communication in contract negotiations. The surgeons’ proactive approach improved their contractual conditions and set a precedent for future negotiations within the hospital.
Jon Appino has been the driving force behind Contract Diagnostics since 2011, where he leads a dedicated team on a mission to empower physicians with the knowledge, tools, and confidence to negotiate robust employment contracts and secure the best compensation packages. With over a century of collective experience, the CDx team is a paragon of field expertise. With over 25 years of diverse health care experience, Jon leads this seasoned team of professionals. From Pete’s 20+ years to Anu’s 25+ years, complemented by Jillian and Laura’s 10+ years each, our team boasts a wealth of knowledge. This remarkable tenure is further fortified by the skills and backgrounds of our other team members, including Kathryn Sarnoski, MD, and Jan Schmitz, director of operations. Their combined experience ensures that Contract Diagnostics offers the most seasoned and insightful guidance in physician compensation.
Discover more of Jon’s perspectives on physician compensation by exploring the Contract Diagnostics blog or connecting on social media platforms like LinkedIn, Facebook, YouTube, and Instagram.
The Contract Diagnostics team offers comprehensive consulting services tailored to physicians and their families, addressing employment contracts and compensation structures. Our expertise spans contract physician compensation, schedules, benefits, and more.
Our mission is to establish a central resource where physicians can access information, consulting, and coaching to navigate the intricacies of employment contracts and compensation structures, ensuring equitable remuneration.
Questions? Feel free to reach out to us via our website or at 888-574-5526.
