Employed Physicians

Physicians are increasingly entering into employment relationships.

This could be with multi-physician practices, hospitals, NPHCs, or other groups, and for a variety of reasons ranging from stagnant reimbursement rates, rising costs of private practice, and better work-life balance. Employment and contractual relationships can benefit physicians and their patients, but such arrangements can also present unique challenges to physicians' ethical, professional, and financial interests. For example, a physician's divided loyalty between his/her patients (paramount responsibility) and his/her employer (legal duty of loyalty and fiduciary responsibility) can create conflicts of interest.

Work Productivity Calculator
Group Practice Employment
Hospital Employment


  • United Healthcare - Effective Feb. 1, 2019: United Healthcare implemented medical necessity reviews for the site of service for several advanced imaging procedures (MRI, CT, etc.) to ensure the procedure is being performed in the most cost effective setting. These procedures cannot be performed in a hospital outpatient department unless certain conditions apply (observation required, sedation required, less than 10 years of age, etc.). Site of care reviews will not be performed if the procedure is done in a free-standing facility or office setting. This policy is similar to the site of service review for elective procedures.

Work Productivity Calculator

  • HCMS Work Relative Value Unit (RVU) Calculator - HCMS has developed a work RVU calculator to help Harris County physicians in locality 18 determine their work RVUs. The calculator includes 40 different specialties based upon the top 50 codes for their particular specialty. Plus, if a particular code is not listed within the top 50 codes additional codes can be added to help determine work productivity based upon the work RVU. 

Percentage change in MD compensation per Work RVU from 2017-2018 for 11 selected specialties:

  1. General Surgery 3.8%
  2. OB/GYN General 3.5%
  3. Pediatrics and Adolescent (General) 3.2%
  4. Cardiac/Thoracic Surgery 2.2%
  5. Family Medicine 1.8%
  6. Otolaryngology 1.7%
  7. Emergency Medicine 1.5%
  8. Urology 1.1%
  9. Internal Medicine 1.0%
  10. Orthopedic Surgery -0.3%
  11. Ophthalmology -1.7%

Group Practice Employment

Hospital Employment

  • AMA Annotated Model Physician-Hospital Employment Agreement - Addresses the specific needs of physicians who are preparing to negotiate an employment contact with a hospital or related entity. AMA members may view the interactive agreement online for free. Non-members may purchase access to the current edition through the AMA Bookstore.
  • Non-Profit Health Corporation (NPHC) - Information regarding NPHC definitions, certifications, local organizations, and how to file a complaint.

Negotiating Employment Agreements, Compensation, and Benefits

Employed Physicians' Benefit Concerns
In May 2014, AMA Insurance launched a national survey, 2014 AMA Report on US Physicians' Financial Preparedness: Segment focus on Employed Physicians, to better understand the prevailing attitudes and behavior of U.S. physicians in relation to their personal financial preparedness.

Elements to Consider When Negotiating an Employment Contract
  • Compensation - Find out how other physicians with similar skills in the region are being compensated to ensure base salary.
  • Benefits - Look at what is being offered such as health insurance, license fees, medical staff dues, stipend for continuing medical education (CME), paid time off, and retirement options.
  • Schedule and Call - Be open to scheduling provisions and call obligations, ensuring that it will be written out in the employment agreement of what the physician can offer.
  • Terms and Termination - Some organizations will have a set term the physician is obligated to stay. However, depending on the agreement, termination requires a written notice usually 30 to 90 days prior to the termination date. Be sure to check how long physicians must stay under the agreement before termination.
  • Restrictive Covenants - Termination of employment organizations can impose restrictive covenants to protect their interest against competitions. Negotiating can limit how far the restrictive covenant is enforced.
Types of Compensation Models/Methods
  • Fixed Compensation
  • Fixed Compensation with bonus
  • Productivity Compensation
    • Compensation based on a percentage collected from the services rendered. Cons of the method is payer mix, contract rates, effectiveness of the billing and collection departments.
    • Compensation based on a percentage of profits less expenses. Cons of the method is the physician does not have control over expenses. In addition, the contract needs to clearly identify expenses that will contributed to the physician and it also needs to specify income.
    • Compensation based on work relative value unit (wRVUs). Work RVUs are developed by published by Centers of Medicare and Medicaid Services. Cons wRVUs can slightly change every year and sometimes Medicare does not assign wRVUs to codes that Medicare doesn't reimburse for. This is the method often implemented by Hospitals and institutional employers. The devil is in the details with this type of arrangement. Some things to consider are discussed in this Physicians Practice article
  • NEJM article, Physician Compensation Models: The Basics, the Pros, and the Cons
Compensation Data Restrictive Covenants A restrictive covenant, or non-compete clause, is a contractual provision that prevents the physician from practicing in a specified geographic area for a period of time when the physician's employment terminates. They are protective mechanisms to shield the employer's patient bases and referral sources from competition. Rules for Nonprofit Health Organizations (NPHC) 


Harris County Medical Society Texas Medical Association American Medical Association Miscellaneous