Electronic Spring 2023 | Issue 54

Contract Negotiations: Questions you should be thinking about.

By: Jordan Romero, MD

When I finished residency and began working at my first private outpatient practice, I quickly discovered the business was not managed ideally. As a result, my compensation was not commensurate with the work I performed. 

Below are some questions I wish I’d asked to gauge the financial and overall health of the practice:

-Where does the practice receive referrals/their patient base from?

This should give you an idea of the relationships a practice has with the community. Do they receive referrals from therapists, primary care physicians, hospitals, insurance websites, universities, or advertising? Where do they get the majority of their referrals from?

-What is the payment source for the patient base? 

Are they a self-pay practice? Do they accept private insurance, and if so, which insurance companies are they contracted with? Do they accept Medicare/Medicaid? Is billing done internally or outsourced to a billing service? Do they have unique arrangements with local employers (universities, medical, law, or other professional schools, hospitals, etc.)? 

Note: The answers to these questions will determine your income if you are entering into a percentage split of revenue sharing with your prospective employer.

-Will you be a salaried employee, or will you receive a split of the gross revenue?  

If you are entering into a revenue-sharing or "split" scenario (70/30 is a common split), ask whether the practice is willing to guarantee you a base salary for a designated period of time (6 months to 1 year) until you have built up a caseload that generates an adequate salary. Ask to see an example of another psychiatrist's reimbursement summary (there should be a report generated with every pay cycle enumerating the amount billed to insurance, the amount paid by insurance, the amount outstanding, and the amount "adjusted", or written off, that insurance will never actually pay). This reimbursement summary should give you insight into how, even in the world of private insurance, reimbursement rates between insurance companies can be very different.

-What benefits does the practice offer?  

Health insurance, Dental, Vision, Short-Term Disability, Life insurance, Liability insurance, 401(k) (with matching?), paid time off, CME days (and reimbursement?)

-If the practice is offering liability insurance as a benefit, be clear on the distinction between Claims Made vs Occurrence based insurance.  

An occurrence-based policy needs to be active when the act or incident occurs. A claims made policy has to be active when the claim is made (Note: a claims policy may require you to purchase "tail" insurance when/if you leave the practice)

-Will you be a W2 employee, or a 1099 "contracted" employee?  

1099 employees are typically given more of the gross revenue, but are responsible for securing their own benefits/insurance/etc.

-Will there be a non-compete clause or restrictive covenant in your employment contract?  

Will you not be able to work at another practice in the area that draws from the same patient base for X years after termination of the agreement and within an X mile radius? This can be negotiated and is not always easily enforced. See if the practice would be willing to include an exception for working in a nonprofit community mental health center, an inpatient unit of a nonprofit hospital, a nonprofit IOP program, or a government agency. This way, you will at least have the opportunity to generate an income if you want to stay in the area and work until the restrictive covenant is no longer enforceable.

-How much autonomy are clinicians given with regard to setting their own schedules and determining the types of patients/cases they wish to see?

-What types of internal professional development opportunities do they offer? 

Do they offer mentorship to incoming clinicians?  Do they have case conferences where clinicians can discuss best practices and management of difficult cases?  Are there nonmedical clinicians at the practice (therapists, psychologists, social workers, etc.), and is there a formalized way for psychiatrists and non-medical staff to interact and learn from one another (joint case conferences, presentations, etc.)?

About the Author:

Jordan Romero, M.D. is a board-certified General Adult Psychiatrist who received his medical degree from LSU School of Medicine in New Orleans. He completed his General Psychiatry residency at Eastern Virginia Medical School. His clinical interests include psychopharmacology and psychotherapy for anxiety disorders, mood disorders, and substance use disorders.  He is now happily employed, and had the above questions answered to his satisfaction by Meridian Psychiatric Partners LLC, with locations in Chicago, Evanston, Lake Forest, Oakbrook Terrace, and Oak Park. If you are a resident, fellow, or practicing clinician looking for an employment opportunity, and would like to hear how Meridian Psychiatric Partners answers these questions, please contact the owner of the practice, Dr Flavio Arana, at farana@meridianproviders.com.  You can also visit their website at meridianpsychiatricpartners.com