NPs negotiating compensation often wonder how the physicians in the group share income coming into the practice. Physician colleagues may not want to share that information with NPs, but NPs can gain some perspective by knowing
how doctors usually divide income.
A recent issue of Medical Economics gives some hints:
Most groups divide income into equal shares. The second most common way of dividing income is according to productivity based on receipts and the third most common way is productivity based on billings. Even though charges don't apply in capitation contracts, many groups divide capitation income by figuring out how much revenue each doctor would have brought in under a fee-for-service system.
Large groups are more likely than small groups to base division of income on productivity, presumably to instill an element of competition, which stimulates productivity. Obstetrician groups were most likely to divide income into equal shares, presumably because of the random nature of the timing of deliveries and therefore the lack of control over productivity in delivering babies.
A few practices, predominantly in the West, are adopting productivity
formulas based on relative value units (RVUs). The relative value system assigns units of value to medical work. For example, a 99313 visit has a slightly lower relative value than a 99214 visit. The RVU system of valuing productivity takes into account the amount of work expended rather than the amount of money brought in.
Non-medical productivity is rewarded in large practices, more often than in small practices. Compensation for administrative and committee work is more common in the East than in the West. In large practices, doctors get a significant percentage of income through teaching and research. Presumably, large groups are more likely to attract research grants and contracts, and are more likely to be located in urban areas where research institutions are located.
From my experience working with NPs on contracts, I know that some medical groups will offer NPs productivity-based compensation. Not may are offering NPs an equal share of income. Most NPs are still on salary, which most NPs are used to and which NPs find comfortable.
This tip is excerpted from The Green Sheet, January 1999 issue. The Green Sheet is a monthly newsletter from the Law Office of Carolyn Buppert. The Green Sheet addresses fast-breaking news about NP compensation and reimbursement. To receive 12 issues of The Green Sheet, send your name, address and $25 to Law Office of Carolyn Buppert, 1419 Forest Drive, Suite 205, Annapolis, MD 21403. A companion newsletter--The Gold Sheet--addresses issues of NP quality performance and malpractice avoidance.
Updated January 18, 1999
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