How high can you go: The basics of recruiting

Contract Language. By Steven M. Harris, AMNews contributor. Sept. 3, 2001.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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Have you ever considered relocating your practice to a geographic area that has an acute need for physicians with your specialized medical skills? Even if you don't actively seek such opportunities, they may seek you. And when this opportunity knocks, it will likely be bringing some sort of incentive package.

Incentive packages are presented in the form of an agreement called a "Physician Recruitment Agreement" or a "Physician Practice Startup Assistance Agreement," or some other close variation of these terms.

As we are seeing more and more recruitment agreements, we'll spend the next couple of columns discussing them. This month, we start with the basics.

Typically, a nonprofit hospital, whose mission it is to make medical services available to members of the community, will identify an area, say thoracic surgery, in which the immediate geographic area is underserved.

The hospital may partner with a practice group that already furnishes surgeons to the hospital and assist it with recruiting a thoracic surgeon. In order to encourage the recruited surgeon to pack up and join them, the hospital and the practice group will put together an incentive package that includes the following:

At its essence, here is how the deal works. The recruitment agreement guarantees the physician a certain monthly or annual income (the "guaranteed income"), which will be paid to the physician by the practice group.

The practice group, of course, will receive reimbursements in connection with the services provided by the physician. These payments, less any refunds made, will equal the physician's net collections. Pursuant to the recruitment agreement, the parties will subtract from the net collections the expenses associated with the physician's practice to arrive at the physician's net receipts. [...]