What is the Most Common Nurse Practitioner Compensation Model? | NP Salary Model for Compensation
What are the most common compensation models for nurse practitioners (NPs)? I would say there are typically three different types of compensation models, but the most common is just a standard base compensation. So, you’re offered an annual salary and your employment contract will reflect that number. And then you’re just paid biweekly or monthly according to your employment contract. The first one is just a straight base NP compensation or NP base salary. Normally, though, even if you are given just a straight base salary, there are sometimes bonuses that you can get on top of that for either quality measures or patient encounters. We see a lot, they just kind of vary, but I would say the majority is just a straight base NP salary.
I would say it’s a less popular compensation model as it’s normally you always have a base salary as well on the second option. But then typically, there’s some type of incentive for RVUs, which is based on your production and encounters with patients. This is a little bit rare for nurse practitioners because when they’re given RVUs, they sometimes tend to compete with physicians, especially supervising physicians. So, that gets a little complicated if RVUs are in your compensation model simply because normally, RVUs are for physicians. It’s a little rare. And then lastly, depending on maybe if you’re in the ER or an internalist, sometimes you will get paid a daily rate or an hourly rate. But again, that’s rare and it kind of depends on your specialty.
So, overall nurse practitioners (NPs) are just going to get a straight base compensation. And then normally, there’s some type of incentive on top of that. Also, you’re normally compensated, as I’ve said, many times in this blog, your base salary. You also can be compensated with a signing bonus whenever you sign or start your position with your practice. Those can range greatly depending on the need for providers in the area, but they’re normally around 10,000, and they kind of just go up from there.
That’s another way they can add to your compensation. Now, a signing bonus is normally at the beginning of your employment, it is considered income though. You want to be careful of signing bonuses. There’s normally a provision in your employment agreement that states you would have to pay that back if you left the practice anywhere between one to three years. So again, you want to read that carefully as it may be a red flag. A signing bonus also is normally included in a NP’s employment contract. And then lastly, if you’re getting a signing bonus, again, I stated that’s only for the first year. Sometimes you get a retention bonus, so you must complete a full year of employment. And at that time, you would receive a retention bonus, and that’s just a bonus on the anniversary of a year of your employment.
Salary Considerations and Timing of Your Pay
And that’s normally anywhere from 10,000 to 25,000 for nurse practitioners. Again, you get your base salary, but there are normally some types of bonuses. For sure when you sign, you should get a signing bonus. Also, it’s not really compensation, although sometimes relocation expenses or allowances can be structured like a bonus, which is also considered income as well. If you’re moving to a new area, out of state, across the country the practice may give you a relocation bonus. That’s anywhere from 10,000 to 20,000. And if it’s structured like a bonus, then it is considered income. And so it’s tax accordingly, but that’s only if you’re going to be moving to a new area and then also you have to consider there are other ways that they would structure relocation expenses, so they may have to reimburse the companies directly, or you provide receipts and then they reimburse you directly. Sometimes it’s not considered income. It just kind of depends. So, always read your employment contract or you may be stuck sending in a termination letter.
NP Offer Letter Details
What should be included benefit-wise in an offer letter for an NP? An offer letter is normally step one of your employment with your prospective future employer. In the offer letter, it’s normally going to outline a couple of things. One is going to explain what your position is. If you’re specialized, what kind of services are you going to be providing, what location and what setting, is it a hospital, clinic, hybrid? Kind of just depends on your specialty. Normally, there will also be something in there roughly about your schedule. Sometimes it will just say 40 hours, or it may break it up if you’re helping in the OR, or a hospital setting will say 70% this, 30% in the clinic.
And it may discuss if you have any call duties, so like nights or weekends, that’s typically included in an offer letter as well. Now, let’s talk about the benefits. What benefits are going to be included in that offer letter? Let’s start with some of your health benefits. Normally, you don’t get a detailed outline or even a benefits package at this level when you’re just first receiving your offer letter. Once you receive the offer letter, it will normally just state that you will get some sort of health insurance, vision, dental, life insurance disability, maybe long term, short term, and then some type of retirement. And it’s not going to say a detailed explanation of how much each policy is going to pay out, like all that stuff. That’s going to be in a benefits summary or a benefits package. Sometimes that’s included later in your employment agreement, but when we’re just at the level of your offer letter, it just states this is what they provide.
So, that’s going to be the number one, probably it’s just going to outline them briefly, just say the name of what it is. Then the next set of benefits you’re sort of like your ancillary benefits. Those are normally included also in your offer letter. That’s going to include any type of continuing education allowance, licensing, fees, and dues, especially a DEA license right now. Those are normally always included in there. If you have any type of board expenses that they’re going to be paying for, that also would be in there, and then also for sure, it will be your compensation. Probably the number one thing you want to look at is what is your compensation and how is it calculated. And then PTO time will also be in there as well.
How much you’re offered if you have any additional PTO days for continuing education, that’s something you always want to look out for as well. And then any type of signing bonus or relocation bonus, all of those will be in the offer letter. The purpose of the offer letter is to start the process of negotiating and to start the process of you becoming an employee. Now, if you sign an offer letter, you’re not agreeing to become employed by the practice. You’re agreeing to enter into negotiations for your employment. And normally, offer letters are pretty good, too. They’re going to be forthcoming with your benefits because they want to entice you to become an employee. So, they’re going to show you all the good stuff right up front.
Your benefits should always be included. You’re going to look for all those health benefits like we just talked about retirement but go further and look and make sure there’s continuing education, there’s reimbursement for those expenses like dues, licensing fees, DEA license, any type of boards that you may be taking, all that kind of stuff you’ll want to look for as well. And then lastly, always look for PTO, how much you’re getting, and look, are you able to calculate it? Sometimes it gets a little confusing. I know it’s popular right now to do a four-day workweek, but when your PTO time is calculated in hours, sometimes that can get a little confusing. So, you may want to reach out and ask them to clarify what that is, and how many weeks is that with your four-day work week if that makes sense.
Nurse Practitioner Paid Time Off from a Practice
How much PTO should an NP receive? The short answer is it really kind of varies. And it really depends on how long you’ve been there. Have you accumulated seniority? Have you been practicing for a long period of time? Where are you in the country? It really depends on a plethora of factors, but some things to really consider that I see honestly day to day with PTO is if you have a four-day work week, sometimes your PTO is less than it would normally be. And that’s just the employer thinking that because you have an extra day off every week, therefore you’re entitled to less PTO.
I would disagree with this, so it’s something that you would maybe want to advocate and double-check. Also, another thing you want to consider is what is in your PTO amount of time, sometimes you’re given just several days and that includes vacations, holidays, CEs or continuing education, and sick time. When you get that initial number of PTO, it looks great. You’re like, wow, going on vacation, but you want to be careful because you need to see what’s included in your PTO time. You should always receive PTO for continuing your education. And that should be an additional three to five days. You also want to account for all of your national holidays, you should have that time off, or you should be compensated for working on those holidays, additional compensation. And then normally, it’s anywhere from like three to five weeks, I would say is average starting out.
And then it just kind of goes up from there. But just to recap, you just want to know how much and what’s included, because it can get a little tricky. Another thing I see with PTO is your schedules in days and sometimes your shifts vary on how many hours; is it 10 hours and eight hours? But PTO is in days, so that gets a little confusing. Are those eight-hour days you’re being compensated for or 10-hour days? You don’t know. And then also, again, if you have a four-day work week, but you have three to four weeks off, is that including the four days or five days? So, it gets a little confusing. However, your schedule is broken down, if it’s broken down to how many hours or how many days per week, it’s customary that your PTO should be broken down in this same amount of time.
That way, you should always know by reading the agreement how many PTO days you’re agreeing to in this employment offer. The other thing I see sometimes is that your PTO has to accumulate. So, on day one, you’re not going to be receiving that full three weeks. It’s kind of prorated for how long you work there. You want to make sure that that’s outlined accurately in your employment contract or agreement, so you know how long you must work there in order to receive those. And then the last thing about PTO, I always check this in the termination section, in most of the time when you give your notice and sometimes you have to give it 90 days in advance, anywhere from 60 to 90 days, you’re not allowed to take any of your vacation days, you forfeit those, and they will not reimburse you for those.
So, keep that in mind. If you’re thinking about terminating your agreement, you want to check and make sure, are you going to be losing all your vacation, sick days, or any type of paid time off? Because you’ll want to take that or be paid out for that before you’d decide to terminate your agreement.
Bonus Compensation and Repayment
Do nurse practitioners (NPs) have to pay back their bonuses if they terminate their contract early? The answer to this is normally 99% of the time, yes, you will have to pay back either a portion or all your bonuses. Let’s first talk about what kind of bonuses there are. Typically, there is some type of sign-on bonus. It can be called a signing bonus, or a sign-on bonus. Sometimes it’s relocation expenses, but it’s given to you a lump sum at the time that you either sign your employment agreement or at the time that you commence, which means start your employment, so like your first day. Those are the bonuses that are offered to you. Now, the reason why you get these bonuses is to attract you to become employed with the employer and provide your services.
So, it’s great. It’s exciting. And normally, there are significant amounts of money anywhere from 10,000 and up, but the thing you need to know, and you need to read very carefully, there is always some type of strings attached to this sign-on bonus because it also helps your employer retain you to keep you there. There’s normally some type of payback provision, and it normally states anywhere between one to three years, you must have continuous employment with the facility. Otherwise, you have to pay back either the entire bonus or the bonus at a prorated amount. So, for however many months you’ve been employed, that portion will be forgiven off that bonus. Some things you want to really consider before you sign your employment contract are if you receive this money at the beginning of your employment as a bonus, it is considered income and therefore it’s taxed as income.
Let’s just say, they’re offering you a $10,000 signing bonus, you sign, you receive the money. You won’t receive the full 10,000 because taxes will be taken off the top as they do normally with income. However, let’s say you want to leave within a year and your contract agreement states that you must pay back your entire signing bonus. They mean the full 10,000. They don’t mean the amount minus any taxes that you’ve paid. So, this is something that you really want to consider. I always recommend either limiting the amount of time like down to a year before the amount is forgiven or asking it to be prorated as I talked about before that every month a portion of the bonus is forgiven. Sometimes you have to sign something called a promissory note. It’s almost structured like a loan. They’re going to loan you this amount of money.
And if you leave before and you have signed that promissory note, they can come after you for that money. And normally, on the promissory notes, there’s some type of interest. So, if you don’t pay back within 30 days of your termination, they can tack on anywhere from 12 to 15%. Again, these sign-on bonuses are attractive, but you want to make sure that you read your employment agreement very carefully to know how long you have to be employed with the practice before this amount is forgiven.
Considerations to Make About Your Nurse Practitioner Employment Contracts
Newly minted nurse who has completed their education and received their certification to practice nursing are justifiably excited about the opportunity to finally work in the career field that they have been training for their entire life. When they receive their first job offer, they are over the moon. Caution is advised in these moments though. The contracts that a nurse receives to begin work at a specific facility are very detailed, and it is smart to keep a level head about things in order to put yourself in the best possible position as far as contract negotiations are concerned. There are several factors that every nurse should look over when they are handed their contract and asked to sign. They may even consider hiring a nurse practitioner contract attorney to review their paperwork with them to ensure that everything seems correct.
Everyone goes to work to earn money, it is as plain and simple as that. Yes, a nurse also often find great satisfaction in the work that they do, but they will still tell you that they wouldn’t do this work if there were no money involved. No one can blame a nurse for wanting to make a living for themselves.
Nurse.org gives the statistics about what a nurse may expect to make:
In addition to being professionally and emotionally gratifying, becoming a nurse practitioner provides the security of knowing you’ve chosen a career that has tremendous job security and is also financially rewarding. The average nurse practitioner’s salary is $111,680 according to the U.S. Bureau of Labor Statistics as of May 2020.
Not every nurse makes that much annually. That figure is an average, and that average includes nurses with many decades of experience. It also includes nurses who work in many different states with the various salary expectations that come in those states. Clearly, there will always be some variation from state to state and even based on the experience level of the nurse. However, this gives you some idea about how much a given nurse can demand as her salary.
Continuing Education Allowance
Nurses do not stop learning the minute that they leave whichever nursing school they attended. Those schools give them all of the basic skills that they need to become a nurse, but they also need some continuing education in order to keep up to date on the latest in the healthcare sphere and make sure they don’t miss out on any new information or procedures that they need to be aware of. Given all of this, it is often the case that employers are expected to pay for the continuing education costs of their nurses.
Continuing education may include:
- Renewing licenses
- Special training classes
- Online learning materials
Anything that can help a nurse continue to develop skills and stay informed may all fall under the umbrella category of continuing education. These are exactly the types of things that a nurse should demand during the employment negotiation process. After all, why should they pay the thousands of dollars per year that this training can cost?
Many hospitals and other healthcare facilities are able to insure their employees for far less than the average employer. This is due in part to the fact that they can offer some services in-house in a way that other facilities simply cannot. Thus, low or no-cost health insurance should be part of the package for hiring on a new nurse.
There is a give and take on this particular benefit. Some nurses are willing to overlook the lack of health insurance benefits if they can receive higher than normal pay. It all depends on how the math works out. If the extra pay is more valuable than the health insurance premiums, then some may decide to pay for their own insurance out of pocket using the extra money that they make at their job. Much of the decision on this one can come down to what the dollars and cents add up to.
A typical work schedule for a nurse may involve working three days with 12-hour shifts followed by four days off one week, and then four days of 12-hour shifts with three days off the next. Some nurses say that this works brilliantly for them and that they are thrilled to have the extra days off. Some use those extra days off to pick up another job, a hobby, or simply to relax and recoup from the long work week that they just endured. However, not everyone is as into this idea.
The stress and mental fatigue of working a 12-hour shift is hard to overstate. This is a job in which the individual is standing virtually the whole time. They are not permitted to leave their workstations, and their meal breaks are short if they exist at all! Thus, it is incredibly important for any nurse who is about to enter the field to think carefully about the kind of schedule they would like to have and if they can find an employer who can work with them to create the most ideal schedule possible to balance out their work and life needs.
Red Flags in a Nurse Practitioner Employment Contract: Nurse Practitioner Job
What are some red flags in nurse practitioner employment contracts? This is kind of a long list, but I’m going to boil it down to the most common ones that I see in an employment contract. You always want to read your contract carefully. I think we can start with a red flag. If you ever read anything that you don’t understand and cannot get clarity on, that’s a red flag. You should seek out an attorney like us who is familiar with employment contract issues. And we can explain that to you. And then if we still don’t understand it, then that’s a red flag. You want to get those words clear in your employment agreement, so you know what you’re signing and what your expectations are.
Employment Agreement with a Practice
I’d say that’s kind of the first red flag. It’s very general, just understanding the clauses that you’re signing. I’d say the second red flag I always look for in an agreement, and if I don’t see this, it’s a big red flag to me. There needs to be a clause in your employment agreement. That is a without cause termination, meaning, either party but especially yourself can terminate this agreement without any sort of reason or no reason at all. So, without cause termination, you give your notice to the practice or the group company, whatever, and normally there is a specific number of days that you have to give notice. Normally, that’s anywhere between 60 to 90 days, you’ll give your notice of termination, and then you are let out of the contract.
Now, you want to be careful, read it carefully. There could be some sort of bonuses or non-competes that would apply, but you are allowed out of the contract. It’s a huge red flag if there’s no way to terminate the agreement. You could be stuck in this contract for however many years unless the other party breaches or you’re let out of the agreement. So, this is a huge red flag. Always look for a without cause termination. And then you want to look for how many days’ notice you must give before you can get out of that contract. Another big red flag I see a lot is overly restrictive non-compete clauses. It kind of depends on the laws of your state. But you want to read your employment agreement carefully because non-competes can be kind of sneaky. Sometimes they go by different names, or you don’t understand what a restrictive covenant is, which is just a promise not to do something.
You’re promising not to compete with your employer. But you want to be careful that you fully understand what that non-compete is restricting. For how long, normally, that’s straightforward, but when we get to red flags, it’s normally the area that you’re restricted for. It could be too many miles. If you are in New York City and they’re restricting you 20 miles, well, that takes out a huge area. That would be a huge red flag. And then also, you want to consider how many locations your non-compete applies to. It’s a red flag if you are restricted from all the locations of the practice even if you don’t provide services there. Another red flag is if you are restricted from locations where you provide any services for.
You’ve gone there one time during your employment, and you’re now restricted from that area. So, you want to make sure that they’re reasonable. Otherwise, that’s a huge red flag, and a lot of times, people don’t think about non-competes when they’re signing the agreement. It’s exciting. You’re starting a new job. You’re going to be making money. But you need to think about, if this ends what are my consequences or how is this going to affect me? Am I going to have to move? Do I have to move out of the state? Even so, non-competes that are overly restrictive are a huge red flag. Another red flag probably would be confusing compensation models. When you sign your contract, you should know how you’re going to be paid and when you’re going to be paid. Normally, base compensations are standard, but when you get into bonuses, sometimes they’ll say something like it’s at the sole discretion of the employer and can change at any time.
It’s kind of a red flag because you don’t know what the criteria are. You have no idea what to expect. So again, confusing compensation models, I would say, would be a red flag. Another one would probably have to be with scheduling or call expectations. Sometimes employment agreements are completely silent on that. You have no idea what the expectation is of your schedule or if you are responsible for any on-call duties. So, that would be a red flag. Typically, an agreement is going to be general, but there should be some type of language that’s going to give you an expectation of what your day-to-day is going to look like. And then going even further than that, some agreements state that you are to provide 40 hours of clinical services that don’t include any admin time.
Contract Red Flags
That’s a red flag. You definitely want to address that because you don’t want to spend hours having to finish up your charting and records before you go home every night, then you’re going to be working well over 40 hours. Just like I said, look at the schedule, the on-call duties, and does it allow for any sort of admin? And then I would say, kind of circling back, it is a red flag if you don’t have any sort of ancillary benefits or business expenses reimbursed from your practice. Now, depending on the size of the practice or clinic that you’re going to be working for or hospital, you may not receive as many business expenses reimbursement, but you should receive some. That’s going to be your CME, you should get money for your CME annually. You should get your license and your dues paid for, DEA licenses, those are expensive.
And the renewals are expensive as well. So, those are things you want to be looking out for. If you’re not receiving those, and it’s completely silent, that’s a red flag. You should bring that up with your prospective future employer. So, to kind of go back through my list, I would start with any unclear terms, that’s a red flag. Non-compete clauses that are overly restrictive, a red flag. In compensation models, you don’t know how you’re getting paid, you can’t figure it out, that’s a red flag. And then not receiving any sort of CME, licensing, dues, that can be a red flag as well, and then not knowing your schedule or on-call duties. You have no idea what to expect whenever you start there, that’s a red flag as well.
A Lawyer Will be Happy to Help with your NP Contract
We have plenty of experienced lawyers who will be happy to help you through the entire contract process that you are working through at this time. They specialize in these types of contracts (and independent contractor agreements), and they will make sure of the following:
- Your contract is written in a way that abides by all local, state, and federal laws
- You have the benefits that you desire from your contract
- There are no hidden clauses or stipulations that you need to be aware of
- Your malpractice insurance and tail costs are taken care of
Essentially, our lawyers will stand by you and be your biggest advocate in this whole process. We only need to be compensated for the time that it takes to read and go over your contract. If you will contact us today, we can start to look over the critical elements that make up your contract for you. We know that you want to get started on your new job as soon as possible, and we want that for you as well. Just give us the chance to make sure everything is tied up nicely for you before you do so.
Consultation with Chelle Law
When your contract is reviewed by an experienced attorney, you will find great financial benefits which end up outweighing the cost of the review. If you are in need of assistance with an employment agreement or contract review schedule a NP Contract Review with Chelle Law today!
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