The Hospitalist Physician: Contracting for Success

Career Resources articles posted on NEJM CareerCenter are produced by freelance health care writers as an advertising service of the publishing division of the Massachusetts Medical Society and should not be construed as coming from the New England Journal of Medicine, nor do they represent the views of the New England Journal of Medicine or the Massachusetts Medical Society.

By Thomas Crawford, PhD, MBA, FACHE, Faculty, Department of Urology, College of Medicine, Affiliate Faculty, Department of Health Services Research, Management and Policy College of Public Health and Health Professions

Over the last 20 years, I have had the opportunity to witness the continuous evolution of the health care industry. This transformative process, produced by a growing demand, declining remuneration, and increased regulatory oversight, has yielded numerous changes to the health care profession. As a rural health care executive, I vividly recall hearing about a new specialty of medical practice for dedicated hospital-based physicians — the Hospitalist. However, with an average inpatient census of 18 patients, I never imagined that I would find myself in a position to establish such a program. Nevertheless, due to increasing capacity issues in the outpatient setting, coupled with an aging populace that presented acuity levels that were becoming more difficult to manage from the office setting, I found myself in a position of needing to partner with my medical staff to establish a 24/7 hospitalist service and, consequently, contract and employ a requisite number of hospitalist physicians. Based on the hospitalist profession being relatively new, coupled with the increasing number of hospitalist opportunities around the country, the purpose of this article is to highlight the contractual nuances that are unique to hospitalist physicians and to underscore the top 10 issues I have found in the innumerable contracts that I have read and helped seasoned physicians and early careerists navigate over the last two decades.

Hospitalist Contractual Nuances
The contractual nuances I ask hospitalist physicians to pay close attention to fall into the following three categories: 1) work schedule, 2) vacation time, and 3) productivity expectations. Although these three elements of employment relationships will be found in all physician contracts regardless of specialty, the impact on the hospitalist physician could be amplified if not addressed prior to commencing his/her hospital-based practice.

Work Schedule
Although hospitalist positions are generally shift-based, a number of positions may require you to cover a period of time that extends past your assigned shift. Example, if you may be assigned a rotation of 7 consecutive 12-hour shifts, followed by 7 days off; however, depending on how the off hours (evenings and nights) are staffed, you could be responsible for all 24 hours for 7 consecutive days. To ensure the cost effectiveness of their hospitalists programs, smaller hospitals will deploy an MD/DO-hospitalist provider during the peak hours and deploy an extender (PA/ARNP) during the less busy times. Who covers for the extender if there are questions or if the acuity of a patient exhausts the capacity of his/her training? The hospitalist provider who has already worked a 12-hour shift. The potential continuous responsibility of the hospitalist physician provides the natural segue for the next nuance — vacation time.

Vacation Time
One of the trends within hospitalist contracts is not to provide paid vacation and/or continuing medical education time (CME) off. This is based on the premise that most hospitalists work a schedule that equates to one week on and have one week off (26 out of 52 weeks) and that vacation coverage would increase the expense exposure of the hospitalist program and unfairly provide the hospitalist physician time off that generally isn’t afforded to physicians within other specialties. However, depending on your work schedule, this may be a flawed perspective. Consider the following: working every other week and being responsible for 24 hours of care each day equates to providing 336 hours per month of coverage versus a primary care provider who is working 12-hour days, 5 days per week providing care coverage for 240 hours within the same month. The difference? The primary care provider will be allotted vacation time, holidays off, and, generally, CME time — while you may have no, or a limited amount, of time away available to you. With this stated, you need to understand your work schedule (hours of responsibility), if you’re allotted vacation time, and how this will impact your work/life balance.

Productivity Expectations
Like your work schedule, you will need to ensure that you have realistic productivity expectations and the resources required to meet them. How many patients will you be caring for per day? What is your responsibility to the emergency department? Do you have access to additional help depending upon the volume? Conversely, if the inpatient volume is low, are you held accountable for the lack of volume? The overarching premise behind a hospitalist program is to improve the efficacy and the quality/safety of the care delivered; however, if your expected productivity is to cover the “house,” support the emergency department for admissions and, potentially, co-manage patients with surgical providers, your efforts could be diluted and despite having a dedicated hospital-based resource, an antithetical impact could occur. To ensure you do not find yourself in a work context that is unmanageable or in which you are held accountable for a lack of hospital-based volume, ensure that your work expectations are clearly articulated contractually. In addition to the afore-referenced hospitalist-contractual nuances, please ensure that you address the subsequent top 10 physician contract issues.

The Top 10 Contractual Issues
1.    Know and fully comprehend how your pay will be calculated
Will your pay be shift-based, productivity-based, based on the net receipts less hospitalist practice overhead, etc.? Ensure that your base-pay and, if applicable the formula for bonus pay, are clearly spelled out contractually and that you afford yourself an opportunity for cost of living allowance (COLA) raises in subsequent years.

2.    Know that there is enough volume to support your practice and salary expectations (use benchmark data when applicable)
As previously stated under productivity expectations and depending upon how your salary will be calculated, you need to ensure that hospital/practice has performed their business due diligence and that there is enough volume to support your hospital-based practice and income expectations.

3.    Understand the type of malpractice insurance you have and who will cover the cost of the tail insurance
What type of malpractice insurance will you be covered by and what are the coverage limits? There are generally two types of malpractice policies (Per Occurrence and Claims Made) and if you are covered by a claims-made policy, you will need to negotiate that your employer covers the “tail” insurance to ensure that you have no large out-of-pocket costs when leaving the hospital/practice. Additionally, the national standard for coverage limits is $1,000,000 per occurrence and $3,000,000 in aggregate; with this stated, based on the high acuity and complexity of the patients that you will be providing care for within a hospitalist role, you should not accept coverage less than the industry standard.

4.    Make sure your work expectations are spelled out in your contract
Although this has already been covered under “work schedule,” it provides me with an opportunity to reiterate that your opportunity to ensure a sustainable work/life balance begins with clear contract language

5.    Free money = time commitment
Upfront money (sign-on bonus, tuition reimbursement etc.) is, in most instances, forgiven over time. With this stated, if you accept upfront money, ensure that a prorated amount of the lump sum is forgiven over the term of the contract. Example: if you accept a $10,000 sign-on bonus and the term of the contract is three years, the contract should ensure that 1/36th of the $10,000 is forgiven for each month worked. Too many contracts call for the $10,000 to accrue interests and not be forgiven until the third anniversary of your employment.

6.    Term and termination covenants (180-day rule)
Can you find another job, find a place to live, and relocate your family in 90 days? Hospital credentialing and insurance enrollment generally will take up to 90 days; with this stated, do not place yourself in a potential position of not having an income or living apart from your family by allowing your employer to terminate you without cause with a 90-day notice. I always recommend extending this “notice” period to 180 days to allow you a reasonable opportunity to secure your next position, find a home, etc.

7.    Non-compete covenants (eliminate or mitigate)
Non-compete/restrictive covenants are defined by time and mileage. Ensure your non-compete is no longer than a year and within a reasonable footprint of the physical address of the hospital that you’re providing services at (versus the hospitals that may comprise a system).

8.    Review copies of the Medical Staff Bylaws and the Rules and Regulations of the Medical Staff
It is imperative that you read these documents before signing your contract. These documents will outline your care and citizenship responsibilities. Your ability to remain employed will depend upon your hospital privileges and these documents will outline the expectations not covered within your contract and your due process.

9.    Understand the culture that you will be working in and how it will impact your satisfaction
Most physicians will leave their places of employment because they simply are not the right fit. With this stated, perform cultural due diligence by talking to other hospitalists, other members of the medical staff, nurses, and employees working within the institution. This qualitative process will ensure that unwanted surprises are mitigated and that you understand both the formal and informal expectations of your position.

10.    Ensure that the “spirit” of your agreement is captured contractually
To ensure that the “spirit” of your agreement is captured, ensure that every recruitment promise made to you is reflected in the contract and is easily interpreted. A vast preponderance of all contracts have an “Entire Agreement” term that stipulates that any promises made to you either orally or in writing are void and that the contract that you sign represents the “entire agreement” between the parties.

Abstracted from Physician’s Guide: Evaluating Employment Opportunities and Avoiding Contractual Pitfalls (2011).

Hospitalist physicians are filling a necessary niche in the systemic delivery of care across the country and the increasing demand for services is translating into an unprecedented number of employment opportunities. With this stated, remember that you are a scarce commodity and that you need to negotiate contractual terms that will balance the delicate ecology that exists between your professional satisfaction and personal happiness.

Crawford, T. (2011). Physician’s Guide: Evaluating Employment Opportunities and Avoiding Contractual Pitfalls. Minn



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