When a physician is either switching a job or many times when someone is coming out of training. They may receive an employment agreement containing RVU (Relative Value Unit). An obvious question to most people not used to being compensated in that way is: what is an RVU? How do I get paid for it? I’m going to break this down in the simplest way possible. Make it digestible for people looking at a job where they may be paid based on RVUs.
From Income Guarantee to Productivity Model
Just an initial matter, most of the time, if you’re entering a job. Is that, there will be a guarantee period before a productivity-based agreement kicks in. For instance, let’s say a gastroenterologist works as an employee at the hospital. They’ll usually have an income guarantee for the first year or two. A base salary that’s not tied to productivity in any way. Then maybe after year two and entering year three, it’ll transition into a productivity model. In most cases, at least as far as being employed at the hospital, it would be RVU based.
What are RVUs?
Let’s talk about what an RVU is and how you get paid for it. An RVU stands for relative value unit. The CMS (Center for Medicare) and Medicaid services came up with the system. I believe it was in the early 90s when essentially, they gave every CPT code a value or a number based on how long it takes, how acute it is, and how much time and skill are involved. All the specialties with all the encounters and CPT codes have an RVU number attached to them.
wRVU vs RVU
Relative Value Units (RVUs) and Work Relative Value Units (wRVUs) are both essential metrics in the healthcare industry, used to quantify and assign value to various medical services and procedures. RVUs encompass three distinct components: work RVUs (wRVUs), practice expense RVUs (peRVUs), and malpractice RVUs (mpRVUs).
wRVUs specifically focus on the physician’s time, effort, and skill involved in performing a procedure or patient evaluation. Each Current Procedural Terminology (CPT) code, used for billing purposes, is assigned a particular wRVU value, reflecting the relative complexity and resources required for that service. On the other hand, RVUs provide a more comprehensive valuation, including practice expenses and malpractice costs associated with the service.
In summary, wRVUs represent a subset of the broader RVU system, highlighting the physician’s workload and efforts, while RVUs offer a holistic assessment of the overall value of a medical service or procedure.
3 Types of RVU
There are three types of RVUs. You have the work RVU for the physician, the practice expense RVUs, and the malpractice RVUs. The only RVUs that matter to the physician is the work RVUs. That just considers what the physician does. One of the benefits of RVUs versus net-collections is that RVUs take out any collection problems. Net-collections is another common way of being compensated for production.
Even though a physician may do a service, provide a service to a patient if they’re being compensated via net-collections. If the management doesn’t receive the money or the hospital or whoever the employer is, the physician won’t see it.
What is a wRVU?
A Work Relative Value Unit (wRVU) is a standardized metric utilized in the healthcare industry to quantify and assign value to the various services and procedures performed by medical professionals. Each codable patient care activity is assigned a specific wRVU value, reflecting the relative time, skill, and resources required for that service. In productivity-based compensation models, healthcare providers are expected to achieve a predetermined wRVU threshold, which helps ensure fairness and consistency in remuneration while also promoting efficiency and quality of care. The wRVU system plays a crucial role in evaluating the performance and workload of healthcare professionals across different practices and specialties.
Relative Value Unit (RVU) compensation is a prevalent and performance-driven remuneration model used in physician contracts, designed to incentivize productivity and promote quality care. Under an RVU-based compensation plan, physicians receive payment based on the total RVUs they generate, which reflect the overall value of the medical services they provide, including their time, effort, skill, practice expenses, and malpractice costs.
The RVU compensation model encourages physicians to optimize their efficiency and focus on delivering high-quality healthcare by directly linking their earnings to their performance. This approach fosters a more equitable distribution of income among medical professionals and allows for better alignment of individual incentives with the goals of the healthcare organization, ultimately benefiting both the providers and their patients.
How RVUs Work
Let’s say write-offs, reductions by insurance companies, or just straight defaults by the patient in paying. All those will go towards the physician doing the work but not getting paid for it. RVU kind of takes that away. It’s only based upon what the physician does. In this case, as I’ve mentioned, each encounter is given a number. That number is then multiplied by what we’d call a conversion factor. That’s how much the physician will get paid.
Let’s do primary care, for instance. Let’s say the median RVUs generated in a year for primary care is roughly 5,000 to 6,000. If they were receiving compensation annually based on RVUs, you’d take 6,000 RVUs, and multiply those times the conversion factor. That’s what they would make for the year.
There are multiple ways of paying them. No one’s going to wait till the end of the year. Generally, they would have a draw. So, there’d be a number that they’d agree to where the physician would be paid that amount. Then either monthly or quarterly, there’d be reconciliation. Suppose there’s a leftover amount, meaning they’ve generated more RVUs than they were actually paid via the draw. They would receive that as a bonus at the end of the month, the quarter, or whatever the reconciliation period.
There is no negotiation as far as what an encounter is worth, as far as RVUs go. CMS sets that, and that’s what it is. There can be a negotiation in the conversion factor that changes based upon specialty. One specialty may have a conversion factor of 35, which is like the average. Whereas possibly, like a neurosurgeon, it might be 75 or $80. It just depends.
Negotiating Your Compensation Factor in RVUs
If you’re with a health network or a hospital, they usually have their internal benchmarks for what each specialty will receive for their compensation factor. Maybe if you were with a small physician-owned group using RVUs, you’d have more leverage in negotiating your compensation factor. How to use this information practically? I would search right out on the internet for what an annual RVU amount would be in your medical specialty. Also, look for the compensation factor.
Another way of compensating physicians is they’ll have tiers. For instance, if their expectation is 5,000 RVUs in a year, then maybe between 5,000 and 6,000. They’ll be paid this comp factor 6 to 7. It would raise to maybe $5 more and then 7 to 8, another $5. That’s not uncommon either. Anyway, that is what an RVU is for a physician. Once again, you only care about the work RVU. There are multiple ways of compensating for it. Still, hopefully, that’s a bare-bones analysis to at least give you knowledge about it.
Chelle Law will provide a physician contract review to identify areas we could improve and to assist you in negotiating the best contract possible.
Other Blogs of Interest
What is a Physician Base Compensation Plus Productivity Model?
How does a base salary plus productivity model work in a contract? It can work in several different ways. We’ll go through that in this article. In a physician contract, if someone is just coming out of training or is switching jobs, there will likely be an income guarantee period. It doesn’t make much sense for physicians to join a medical practice or a hospital. Then go straight production from the beginning. Now, it could be specialty-dependent. Maybe that may make sense if you’re doing staffing or shift work with an ED or hospitalist.
Productivity Based Model
However, if you are building a practice in primary care, cardiology, or any outpatient-based clinic practice. It takes time to build up a patient base. 12 to 18 months is an average time for practice to reach maturity. If you come in, there likely will be an income base guarantee. And maybe some stretch goal production models where you’ll get a bonus if you hit certain thresholds. But in that case, after the income guarantee period, after the first year or two, it can then switch. And today I’ll talk specifically about how a base salary plus productivity model would work. It’s basically a hybrid compensation model. I’ll take two scenarios and kind of walk through them briefly.
Physicians Base Salary Plus RVUs
Let’s say, physicians have a guaranteed base, plus RVU-based productivity bonuses involved. And let’s talk about how that would work. Let’s say you made 240,000 in year one. And then 240,000 in year two is the income guarantee. And after that, your compensation then shifts to the productivity model. An employer could, instead of just paying you 240, they could cut your base guarantee in half. So, you’d be making 120. Then once you hit certain productivity thresholds, they would calculate, and you would get the surplus. Let’s take RVUs as an example. Let’s say you’re in primary care and the annual RVU goal is 6,000. Most places would do maybe a quarterly reconciliation. It’s 1,500 RVUs that you’re expected to generate.
You have the 120 annual base, right? Divide that by 12. And so, you have 10,000 a month, and after the quarter, they’ve paid you 30,000. In addition, at the end of that, they would say, alright, did you generate 1500 RVUs? Then anything above that, you would get multiplication where they’ll take the surplus RVUs times compensation factor. You would get that as a bonus at the end of the quarter. In that scenario, that’s not how most places would do it. Because most physicians won’t be okay with getting a small base each month and a big windfall at the end.
Base Salary Plus Net-Collections
Additionally, if you were getting half base, you wouldn’t be expected to have a normal median RVU productivity to get additional comp. They would lower it. Another way to do a base plus productivity would be through net-collections. The scenario would be the same: care physicians would have a base salary. And then they would have a net collection threshold. One way would be that the physician is getting paid 20,000 a month. The management would say, okay, once you cover your base pay, once you’d get 20,000 in collections that month. Anything above that amount, you would get a percentage of usually somewhere between 30% to 40%. And then they would get that at the end of the month.
Usually within 15 to 30 days of the end of the month. That would be a normal way of doing it as well. From contract to contract, the way physicians earn probably varies the most from any other term.
In Practice, is One Better Than the Others?
There are so many ways of doing compensation. Is there one that’s better than the others? No, I don’t think so. It depends on the specialty and how efficient the billing practices of your business are. The volume and how established the practice is. All those variables, I guess, combine to determine what type of compensation model would be best for you.
Until we can take a total look at it, there’s no way of knowing what’s the best in your situation. Then also, some employers say, this is the compensation model we’re using. And it would help if you dealt with that as well. In that case, say you know what the compensation model is and that they’re not changing the model. The one variable they can change is the numbers used. The RVU threshold, the net collection percentage, and the base straw. These are all things that can change and determine whether it’s a great opportunity for physicians in their careers. That’s a brief example of a base compensation plus productivity model for physicians.
How is Physician Productivity Calculated?
What are the different ways of calculating physician productivity? As someone who reviews contracts daily, I find that the two most likely methods of calculating productivity are either net-collections or RVUs. And so, let’s break both of those down. Suppose someone is an employee of a hospital network. In that case, their productivity will likely be calculated through RVUs.
What are RVUs (Relative Value Unit) and How is it Computed?
RVUs are relative value units. CMS, Center for Medicare Services, issues a list every year and has different RVU values associated with the different types of encounters that the physician has. In most scenarios, whatever RVUs generate is multiplied by a conversion factor, and that number can also vary. It’s usually somewhere between $35 to $80, based on the physician’s medical specialty.
A Scenario for RUVs Measuring Physician Productivity
Let’s take a scenario where a physician has been employed in the hospital network for a couple of years on an income guarantee. Then their contract will switch to just pure RVU production. Usually, the base salary level will be chosen below what they would’ve made the year prior. So, if somebody made $240,000 and their RVU production matched that in year two and then switched to production, maybe they’ll back down whatever the draw is, like what they’re paid per payroll. So, if they’re receiving 20,000 per month, perhaps they would back that down to 15,000. And then if the physician, when they did the RVU calculation, exceeded that, they would get paid that amount at the end of the month, or quarterly as well as a usual way of doing it.
How RVUs are Calculated
If they’re doing RVU production, it’d rarely be less than quarterly or monthly. That’s how a physician gets paid for RVUs. You take the RVUs generated, multiplied by a conversion factor, and that’s what they get. And then, at some point, there’s always a reconciliation to ensure they are getting what they burn. And there are scenarios where a physician may make less than what they had been earning. Then, in that case, most contracts will carry forward the deficit. So, a care physician could have a negative balance in a month. And if so, the contract will likely state that the negative balance will be carried forward into the next month until a physician exceeds the negative balance.
The other way is through net-collections. Net collections are literally what the management collects for the physician services. Now, net-collections are utilized for the most part in private physician-owned practices. The difference between why someone would use RVUs versus net-collections is a hospital network operates RVUs because there are many times when a physician must provide healthcare. They know the person they provide healthcare to can’t pay the bill.
Hospitals and physicians also don’t think it’s fair that they are part of the job of giving that charity care. However, they still provide that healthcare and want to get paid. And RVUs only consider the work that the physicians do. It doesn’t consider what’s collected. Whereas, with net-collections, most physician-owned practices utilize net-collections because almost everyone they’re providing health care to in practice has insurance or private pay.
Most smaller physician practices aren’t going to provide that charity care. They want to know, will the care physician be paid for what we receive? Now, why can it be different? Well, there could be write-downs from the insurance companies. There could be write-offs from patient care issues where they give a refund, something like that. So, even though the physician may provide healthcare, what the practice receives could be less. And in a net-collections productivity model, usually, it would be monthly productivity.
Guaranteed Minimum Base Pay for RUV Model
The physician would likely much like the RVU scenario where they’d have a small, guaranteed base, or maybe it’s not even guaranteed, but just like a draw. Let’s take the same amount of money. Let’s say 20,000 a month for a physician. Most practices will say, okay, once your collections exceed your salary for the month. You will get a percentage of whatever is collected after that, usually somewhere between 20% to 35%. And once they reached the threshold, as far as they go up, let’s say they collected 40,000 in a month and had a 25% net collection with a 20,000 threshold. Then they would get 25% of 20,000.
Are Medical Physicians Paid Purely on Net Collections?
Now, I’d say rarely is a physician paid purely on net-collections, meaning there’s no minimum guarantee or draw. It’s just whatever they do in the month, that’s what they receive. Those scenarios are challenging, especially when the physician is starting. Because there’s no guaranteed payment for the first couple of months. And so, they could be working for 30 days without receiving any money. I mean, the average accounts receivable cycle is somewhere between 30 to 90 days.
In that scenario, the physician wants to ensure a minimum draw, so they make at least a little bit of money in the first couple of months. Then it will ramp up over time. The last consideration is, and this goes for both RVUs and net-collections: if there is a bonus structure involved, there will be language in the contract that states, if the contract is terminated, how is the physician paid? There are times when it will state that the bonuses will only be paid out if the physician is an employee at the time of the payment.
So, even though they may have earned the bonus if they terminate the contract. Or leave the employee who made it and it’s paid out. They won’t get any of it. Strategically, sometimes the physician must wait until the management pays whatever bonus is coming. Then they can give notice and leave. I mean, that makes the most sense to remember in their careers. So, that’s how they measure physician productivity, or at least the two main ones are RVUs and net-collections.
What Is the Best Physician Compensation Model?
What is the best physician compensation model? I wish I had a black and white answer, but it depends. Let’s work through the different types of physician compensation models and who can benefit from each. There are three main types of physician compensation models.
3 Main Types of Physician Compensation Models
First, just a straight-based salary. You work for the management. They pay you 300,000 a year. You do the work, that’s it. You get the straight base, no productivity incentives, compensation, nothing. Second, you could earn on net-collections. Whatever revenue your services bring into the practice, you would get a percentage of that. Typically somewhere between 35% to 45%. And then lastly, RVUs. The physician produces work RVUs for every encounter and generates a certain revenue based on the schedule released by CMS. Then there is the compensation factor. An actual monetary value multiplied by the RVUs generated times that compensation factor. That’s how much physicians will make in their careers.
There are certainly hybrid models that combine one or all of these. It would be rare to have a compensation model with both net-collections and RVUs. That seldom happens. Maybe there would be a half-based salary minimum. And then the rest of your compensation would be tied to either net-collections or RVUs. I find that most physician-owned practices will have some productivity compensation and use net-collections. And then most hospital-based health network employment would utilize RVUs.
Why do they separate them? Not sure. But that’s just how it works in this industry. Which one is best? I think having a straight base salary with absolutely no performance incentives or productivity incentives doesn’t make sense to me. Now, if you’re a new physician coming into a new job. I’ll say, with the hospital, you’re establishing a practice in the area. There will almost always be an income guarantee for the first few years.
RVU Not For Newly Practicing Medical Physicians
It usually takes 12 to 18 months for a practice to reach maturity. So, it only makes sense that physicians wouldn’t be placed on productivity compensation immediately. Especially primary care, cardiology, and any medical specialty where you must build up a patient base like ED or hospitalists. Those types of things where you’re just doing the work before you. You’re not building up a practice. You can hit the ground running. In those scenarios, it’s okay if it was in the RVU-based productivity model. But it makes no sense initially if you’re building up a practice. Many organizations will have an income guarantee for the first year or two. And adjustment into a hybrid of base salary plus RVUs.
Let’s first take net-collections. The main point of negotiation in the net collections-based agreement is the percentage. When I speak to physicians, they’re taken aback upon seeing they’ll only make 35% of revenue collected by the management. However, overhead is expensive. 60% is not an unusual amount in physician practices. If the management is going to have revenue, they need a percentage within that area. As I said, usually somewhere between 35% and 45% is normal. You will not see a net collections-based agreement over 50%. And if they’re a good businessperson, honestly, anything over 40 to 45 wouldn’t make financial sense unless they’re efficient.
Negotiate the Percentage of Collection
One thing to negotiate would be the percentage of collection the management gives. It can either be calculated monthly, quarterly or yearly in some instances. And then it’s tier up, or there’s reconciliation at the end of those periods. So, the percentage will be the negotiating point if it’s a net collections-based agreement.
It can be just pure net-collections, meaning everything you bring in that’s your revenue. Or maybe you have a base salary. And let’s say that any quarterly collected over $200,000. You get a percentage of whatever it is, in addition to your base salary. As far as RVUs are concerned, once again, you could be paid monthly, quarterly, or yearly if it’s reconciled. You’re not getting paid yearly, but they could reconcile it at that period. Usually, in an RVU-based contract, they would come up with a draw.
Let’s say you’re taking home 10,000 a month, no matter what. And then, at the end of the month or quarter, there’ll be a target. And then any RVUs generated above that target would be multiplied by that compensation factor. Then that’s what you would take home. So, what is the best? Well, as I said at the beginning, it depends upon the setting for the physicians. Net-collections based do not work in a hospital environment. So, if you are in a healthcare network hospital, it simply doesn’t work. RVU is the only thing that works in that environment.
It All Depends on the Setting and Practice
I think RVUs are fair, but you also must consider this. If you’re in a medical specialty like ED or hospitalists, and you’re only getting on RVUs. You could be completely screwed if the volume of the hospital is very low. If the sense is slow, if the ED is slow, there’s nothing you can do. In that scenario, you would not want to be paid purely on production. And honestly, it doesn’t happen very often, but I’ve seen it before. And it’s just a bad idea.
Now, if you’re in primary care, you’re at the mercy of, is the office manager good? Is the office set up well, and are they efficient? Is the medical billing and collection department on top of it? If you’re on a net collection base agreement and the billing and collections department is terrible. Well, you’re the one going to suffer from that. So, I always try to work in a hybrid where you’ll get a guaranteed base. But if you perform over a certain amount, you’ll also reap the benefits of the production. I mean, it’s just human nature. If you can get a bonus, then most people are incentivized to work harder to get that bonus.
That’s why most of these employers provide something like that. When you’re on a base salary, with no opportunity for production, you’re just doing work that’s in front of you. It’s just human nature that you likely won’t focus or work as hard if there’s no opportunity to make more revenue. So, which one is better? It depends upon the setting. But all three can work perfectly for physicians if it fits the practice that they’re in.
What is the Most Common Physician Compensation Model?
What are the most common types of physician compensation models? Spoiler alert! There is no common model. From contract to contract, the way people get compensated varies the most. It’s the most variable part of any physician contract across contracts. I review hundreds of physician contracts a year. It just blows my mind how many ways different organizations compensate physicians. But there are probably three main types, and I’ll go through those right now.
The easiest and simplest way of paying physicians is just a straight-based salary. There is no productivity attached to it, no volume expectations. You do the work; you get paid a base salary, and that’s it. For people just coming out of training and starting their careers. It’s not uncommon for them to receive a guaranteed base without productivity for the first year or two. And there are many jobs where they pay the base, and that’s it.
Pay Through Production
However, there are also different ways to compensate physicians that introduce some productivity in practice. I’d say the first one is RVUs. When someone enters an organization, whether they’ve been out for a long time or just coming out of training. Just starting out their careers. If you’re joining an organization. This goes mostly for hospitals and big healthcare networks. It’s rare to have a physician-owned practice use RVUs. So they’ll have an income guarantee, usually for a year or two. And then, their physician compensation model will switch completely to RVU performance compensation. How much they make each year depends on how many RVUs they generate in their careers.
I will not get into what an RVU is or how they calculate it. I do have a couple of videos. If you’re interested, you can look at it. I go through what an RVU is and how a physician gets compensated for it.
But on the basic level, they multiply the number of RVUs you generate times the compensation factor. Like a monetary amount that varies by medical specialty. Usually, it’s somewhere between 40 to $80. And then they multiply that times your RVUs, and that’s how much you make for the year. Now, there must be some details that go into that. Usually, there’ll be a base draw. So the physician will continue to get a regular monthly salary, but then it’s reconciled quarterly.
Example Scenario on the Job
For instance, let’s say they’re taking home 20,000 a month. At the end of the quarter, they’ve been given 60,000 from the management. And then they’ll look back on how many RVUs they generated times the compensation factor if there is a surplus. It means they generated more RVUs than they made and are usually given a bonus. Most employers in that scenario will not give a full percentage with a base draw. Let’s say in the previous year, someone just via RVUs generated like $240,000, right? So, it’s 20,000 a month. The management will not give them a base of 20,000 a month because there will be variables involved. If someone takes a two-week vacation but keeps getting paid 20,000 per month.
There will be a deficit they will either have to pay back or carry forward. Most employers will give maybe around 80% of what they made in the previous year as their base draw. And then that way, there aren’t a lot of negative balances to carry forward. Most physicians do not like that at all. One way to do it is just after the income guarantees a straight RVU compensation model. Others will do a hybrid of a guaranteed base in addition to RVUs. They’ll give monthly, quarterly, and yearly targets for RVUs. Once the physician hits that total amount, they can receive a production bonus.
As I said, it would be just the RVUs generated above several times the compensation factor. Hospital management and healthcare organizations primarily use them.
How Net Collections-Based Model Works
I would say that a different compensation model is net collections-based, primarily from physician-owned groups from smaller practices. How it works is that they’d calculate the amount collected by the practice that directly results from the physician’s services. And then the physician would get a certain percentage of that.
Usually, the percentage would be between 30% to 40%, somewhere in there. Now, you think that’s completely unfair if you’re a physician. I only get 30% to 40%. Still, when you consider overhead staffing, supplies, payroll taxes, and all that stuff. It does work out mathematically to be equitable for both parties. You are not going to get net collections-based compensation. It is like 50% or anything. It’s just not going to happen. Net collections-based compensation models are like RVU-based models, and there’ll usually be monthly reconciliation. And if you were to generate a hundred thousand dollars monthly, then they would just do the calculation.
If you’re on 40%, you will get $40,000, usually paid within 15 to 30 days of the end of the month. And that’s what you make. Some more variables go into it, which is tricky if you go into a job. It’s just pure collections from the very beginning. You aren’t making a lot in the first couple of months. Because the average accounts receivable revenue cycle can be anywhere from 30 to 90 days. It’s from when you do a service to when you get paid through the insurance companies. You could work for the first month or two and make a tiny amount of money. And then it grows over time. Usually, in those scenarios, we try to bake in a draw. So that the physician isn’t just making a tiny amount in the first few months.
My opinion on what’s fair and what’s not? It just depends upon the job and the medical specialty of the physician.
All the different models are fair if the compensation is proper. I think on a kind of motivational level. It makes sense to incorporate some production into the contract. Someone who only has a physician base salary and has no bonus or upside in producing more or working more? It’s just human nature though, that they’re just. I don’t know if being ‘stagnant’ is the right word. But people are motivated by money. That’s just a reality. And if an management can incorporate some way of compensating an ultra-productive physician, there’s no downside to that. It’s probably a matter of whether the employer’s creative. But, I mean, there are a million ways of doing compensation.
So those are the three most common physician compensation models: straight-based salary, RVU-based production, and net-collections. And then there are so many permutations that would be a hybrid model of all three of those.
How Much are Resident Physician Salaries?
One question med students have is the average salary for a resident physician. After a physician graduates from medical school, they move on to an internship or residency within their specialty. Then earn. But for most of them, it’s simply not even remotely enough for the work that they’re doing. So, it’s not uncommon for residents to work 70- or 80-hour weeks. The average salary for residents in the United States is around $63,000. Maybe you’re a resident right now, thinking, I don’t even make close to that, or maybe I make more. This is average across all specialties. Some specialties will make a little bit more in their careers than others.
Leverage in Salary Negotiation
Some could be as high as the 60s. Whereas maybe in family medicine, you could be about 50s. Can residents negotiate their salary during training? No, they have no leverage. Anytime you’re negotiating a contract, you base it upon leverage. Even those residents coming out of training and moving on to their first employed job don’t have much leverage either. The only leverage they have in those situations is if they’re in a needed medical specialty. Or two, if they’re willing to go to an under-served geographic area and need physicians.
So, around 63,000 is the medical residency salary. If you think of it this way, if they work 70 to 80 hours a week, they’re making about $15 hourly. And providing healthcare as a doctor for $15 an hour. Now, once they move out of training, the salary increases substantially. And for some specialties could be an eight-fold increase, at least just coming out. But that’s what it is. One consideration we make when reviewing and negotiating the resident’s or fellow’s first contract. Most of them don’t have much money coming out of training.
Importance of Relocation Assistance
So, suppose the new employer is offering a signing bonus or relocation assistance. In that case, we want to ensure they’re getting a chunk of that before moving and starting the new job. Wherever, if they are moving from where they’re currently training. Simply most residents, especially if they have family, maybe the only breadwinner. At that point, they don’t have $10,000 to $15,000 if they’re making a cross-country move. So, we need to ensure that either the employers pay their moving costs directly to the moving company. Or they’re going to front the money before the physician needs to spend it on the move.
In that way, they don’t have to outlay a ton of cash. Because it certainly is expensive moving from one place to an entirely different one. Medical residents certainly are underpaid. Unfortunately, it’s part of the process they must go through to be fairly compensated for the services they provide. But it’s just tough when you’re making that little. And I think the average physician has about. I think 47% of physicians have student loans over $200,000. It could be a big burden.
When Should a Physician Resident Start Looking for a Job?
When should resident physicians start looking for jobs? This is a complicated question. First, I do contract reviews daily for physicians. Many are individuals getting their first jobs who’ve never had an employment contract before. They’re either in their last year of residency or fellowship and have an offer they want me to review. There are occasions where there’s a multiple-year fellowship, maybe a PGY-2 or something like that. Wherein residents already have an offer that won’t begin for two years and want me to look at, as well.
Search for a Residency Job
Let me give some words of wisdom, just from doing this for a couple of decades now. One, if you are a resident or a fellow. You know where you need to be geographically. Maybe you have to move home, or you have a significant other completing trading themselves elsewhere. Want to move close to your family, whatever it is. If you have a pinpoint location in mind, getting started sooner than later is probably a good idea. Start looking for work when you still have two years left in training. Think of it from an employer’s perspective. Some employers don’t have immediate needs for physicians, right? So, if they are well run, they’ll have financial forecasts.
Forecasts as far as the patient load will be, perhaps the management is expanding and opening a new office. But they’re not going to open it for a year. I guess I’m saying that employers know that they’d have a need for a physician. But sometimes, it’s not for a couple of years. That’s why management will start looking immediately for a position that’s not immediately available. Once they get out there and see some candidates, even if that candidate has two years left in training. It’s not uncommon for them to offer them a position and make them sign an employment contract. One benefit of looking early in their careers is simply getting in before someone else takes the part. So the earlier you look at the job, the more likely you’d have a chance to get it. If that makes sense.
If You Take a Practice Early
Next, the downsides of going early. What’s the negative part of finding a position far out from when medical residents have completed training? Suppose you sign an employment agreement that doesn’t commence for two years. And then you have some change in the family. Maybe the significant other that was supposed to move to one city is now moving to another. Or there’s a sickness in the family. There are a million reasons why a location is perfect at one point, and two years later, it’s not. The downside of signing early is that things may change in your life, but you have signed the employment agreement. Then it gets into: how can I terminate this agreement even before I’ve started? Are there any penalties associated with it? Some contracts have built in that if the physician doesn’t start, they will owe some penalty.
Which Year to Start the Job Search?
I would suggest. Before signing an agreement with that kind of language, probably get it reviewed by someone to go over the ramifications. What happens if I sign the agreement, I either can’t start or don’t want to start. And then need to get out of the contract? Another possibility is you sign early and get a better offer. So maybe it’s just a better opportunity for you. The compensation is more. The benefits are better. The concern is that if you sign a contractor early, you’re foregoing any potential opportunities down the road. Now, some employers are okay with letting someone out with enough notice.
The contract will have a notice requirement, but if you haven’t even started, most employers are understanding. If there is some actual change in family circumstances. They’re not as forgiving if it’s simply that this person is paying me more than you. I don’t want to complete the terms of this agreement. Once the contract is signed, the employer relies upon you to start, so they will stop recruiting anyone else. They’re going to make plans to either bring in more patient volume. Or maybe the office they’re opening up is contingent upon you being there.
Where Residents Should be Looking
So, I guess there are problems for both sides if the physician doesn’t want to start. The employer could have some damages associated with the physician not completing the terms of the agreement. Overall, I’d say the sooner, the better to start looking. However, taking the first offer and signing an employment agreement without comparing different bids is a bad idea. There are almost always multiple opportunities for somebody. Just to accept the first one just because they are the first doesn’t make a lot of sense to me. So I’d suggest you look at multiple offers, gauge the compensation structure amongst them, and then go from there.
How is an RVU calculated?
Relative Value Units (RVUs) are used to measure the resources required to provide a particular medical service. To calculate the work RVUs (wRVUs) for a specific service or procedure, you first need to identify the appropriate CPT (Current Procedural Terminology) code. Each CPT code is assigned a specific wRVU value, reflecting the complexity and time involved in performing the service. To determine the total wRVUs for a specific time period, multiply the frequency of each CPT code billed during that period by its corresponding wRVU value. This calculation helps standardize the comparison of services across various medical specialties and allows for a more equitable compensation system for healthcare providers.
How much is 1 RVU worth?
The monetary value of a Relative Value Unit (RVU) is determined by the annual conversion factor, which can vary depending on the payer, such as Medicare or private insurers. For example, in 2021, the Medicare conversion factor was $32.40, which means Medicare paid $32.40 per RVU for that year. However, it is important to note that conversion factors can change annually and may differ between various insurers. To determine the current value of 1 RVU, consult the latest fee schedules or reimbursement rates provided by the specific payer. This information will help you understand the financial implications of RVUs in the context of healthcare reimbursement and physician compensation.
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