Practice Management Alert

Write contracts that keep physicians engaged and lead to future success.

You need your whole practice staff on board to achieve financial success and patient satisfaction. It’s easy to focus on the responsibilities of practice managers, front desk staff, and techs, and let physicians off the hook because of their specialized knowledge and the fact that they’re the ones who supervise treating patients. But the best practices know that engaged physicians help their practices thrive in value-based medicine. Cultivating a practice culture of engaged physicians begins with creating strong physician contracts.

Stephen Dickens, JD, FACMPE, Assistant Vice President of Medical Practice Services at State Volunteer Mutual Insurance Company, outlined the crucial elements of a strong physician contract in his session at MGMA’s 2017 Financial Management and Payer Contracting conference. According to Dickens, a strong physician contract contains the following elements:

• Legal Mechanics: The parties involved, consid­eration, and terms. This part of the contract identifies the individual (physician) and corporation (provider or umbrella company) at hand, states that the provider has offered employment and the physician has agreed to provide services, and specifies the period of time for which the physician will work for the provider and if the contract will be renewed automatically.
• Compensation: The method by which the physician will be paid (regular salary, based on production, or a hybrid of the two), as well as how the physician will receive benefits, bonuses, incentives, etc. Practice owners should identify 5-6 measurable metrics to use to measure the success of the physician. Value-based payment models, such Quality, Resource Use, Advancing Care Information, or Clinical Improvement Activities under MIPS should dictate the physician’s metrics.

In today’s value-based market, Dickens says, the equation for physician compensation looks like this:

X $ number of wRVUs + Quality (30%) + Cost (30%) + Advancing Care Information (25%) + Clinical Improvement Activities (15%) = Physician Compensation

Owners also need to determine their physician’s benefits package. Will physicians receive the same benefits as employees? What will their time off look like?

• Performance: This part of the physician contract requires owners to answer the following questions: What happens if your physician becomes active in an association? Are you going to allow them the time and financial resources to attend meetings and conferences? What are your expectations regarding physicians being on call, making rounds, etc.? When do you expect physicians to record notes? Patients deserve to have their information recorded in a timely manner, so include an expectation in the contract.
• Behavior: This covers how physicians conduct themselves in and out of the practice. Dickens recommends that owners ask themselves the following: How do you expect physicians to handle medical records and PHI? “Remember, HIPAA applies to physicians, as well,” says Dickens, “just like your practice managers, techs, and front desk staff.” Also, be sure to include your practice’s Code of Conduct in the contract to help reduce physician discipline. State the limitations on the physician’s authority (i.e. physician cannot act on behalf of the practice). How is indemnification — when a physician does something that gets the practice in trouble — handled? State that the party at fault will make up for it.
• Separation refers to when a physician leaves the practice. As Dickens notes, “separation is not always a bad thing, but define the terms in which it happens.” In the physician contract, define what “notice” means and how much notice a physician needs to give before separating. Do the physician’s benefits change depending upon the reason for departure? Be sure to include a noncompete agreement, time and distance restrictions, language about which patients the physician needs to contact about the departure, and whether there will be a penalty for the physician breaking the contract. Also, what are your policies on physician retirement and slow-down?

Along with policies on Separation, Dickens also recommends that physician contracts include a policy on the physician’s rights to buy into the practice or buy out the practice eventually. “Define the policy before you need it. Do not assume that you’ll agree to terms later,” Dickens urges.

Make It Legal

Dickens’ final, most important piece of advice on creating strong physician contracts? Have a lawyer review them, preferably one who knows the health care and employment law worlds well. Sign and date the contract, secure the original copy, distribute copies to the appropriate parties, and review the contract annually.

“Mistakes will be interpreted against the person who wrote it,” he says. Cover your bases and protect your practice by engaging a lawyer’s help.