The Contract: A Tool for Mapping the Future

Contract negotiations. For most individuals, those two words elicit a mix of dread and disdain. While lawyers and individuals with certain personality traits seem to thrive on details, most people find negotiations intimidating and the review of contracts tedious. Yet contracts are inescapable, especially for professional level medical care providers.

While physician extenders in dermatology practices cannot forgo the contracting process, they can make the most of the process by viewing the contract as a tool that builds the foundation for their long-term success within a practice. The contract isn't just about establishing salary and benefits. It's about longterm goals and opportunities. The most useful contracts will anticipate as many of the challenges and opportunities that may arise in practice and outline a plan for dealing with them. Following are insights on common “What ifs” that a contract should address.

Trial Periods and Contract Terms
“Everyone gets a little nervous when it comes to contract negotiations. It is quite common that PAs feel vulnerable and somewhat lost in this process. In order for everyone to feel comfortable, contracts need to be viewed as an agreement that can be modified at times if needed,” says Kasey Drapeau- D'Amato PA-C, MPAS.

While a discussion of salary and benefits, roles/responsibilities, and expectations is essential before the Physician Assistant starts to work for the practice, a formal contract may not be necessary right away. “When a PA is first hired to a practice, it makes sense for both the PA and the Supervising Physician (SP) to have a six month ‘trial' period before signing the dotted line,” Ms. Drapeau-D'Amato says. “Because PAs are dependent practitioners, it is vital to the success of the practice that the PA and SP have a comfortable working relationship. If the PA feels uncomfortable in any way during that six months, then he/she can simply walk away with no hard feelings. And vice versa: if the SP doesn't feel that this PA is a good fit for the office, then he/she can simply state that at the six-month meeting.” The trial period permits the parties to professionally part ways, if necessary.

Jason Roddick, MS, MSPAS, PA-C, notes that while, “A 'new-hire' has no firm ground to contract for the future,” he suggests that, “the first contract should be lucrative for both parties—the hiring physician and the PA—but should be quite mobile so that it allows for change, and allows for change in the near future.” The PA's first relationship with his/her supervisor is as an “employee,” he notes, “That relationship begins day one, but a relationship with your supervisor that you may consider a 'partnership' takes time and trust to develop.” He also recommends a one-year term limit on the first contract.

Negotiating the first contract sets the tone for future contract discussions. “This first contract will set the tone for what's to come, and as a result, it should be constructed in a fashion that will allow the hiring physician a rudimentary understanding of future contracts,” Mr. Roddick says. He cautions Physician Assistants not to focus too much on remuneration, especially productivity incentives, “versus constructing the contract that allows for growth.”

Prior to signing any contract, Abby Jacobson, PA-C owner of Strategic Medical Consulting, advises physician extenders to have a lawyer familiar with healthcare contracts and with state laws review the documents. For help identifying a qualified lawyer, she recommends contacting either the state chapter of your professional chapter or the national organization. A potential employer should expect that you would have the contract reviewed and should be re-assured to know that both sides fully understand the specifics of the contract and there is less chance of dissatisfaction borne of misunderstanding in the future.

Additionally, as a professional level healthcare provider, the physician extender should negotiate directly with the practice owner, just as a new physician would, says Ms. Jacobson, who also founded the website PAprofession.com. Negotiations should not be handled by the office manager. To ensure productive and beneficial dialogue, face-to-face meetings planned with ample time for meaningful discussion and no distractions are best, she says. That likely means meeting before or after clinic hours; don't try to meet between patients, even if it's just to renew or update an existing contract.

If a physician directs the PA to the office manager for negotiations, “Explain that you are a professional level healthcare provider who is supervised by the physician, not the office manager,” Ms. Jacobson says. “Significant resistance may be a sign that the physician or practice doesn't really understand the role you will play.”

What if? You want to ensure contract terms match your contributions and accommodate your changing needs.
Annual contracts may be best for the physician extender and the practice, allowing for modification of terms when indicated. Especially for the new hire, a one-year contract is best. “If your contract automatically renews, you miss the opportunity to renegotiate better terms, including more vacation time and increased compensation,” Ms. Jacobson says. An annual renegotiation period can force the extender, who might generally feel uncomfortable in negotiations, to address important issues he or she might otherwise not acknowledge, she says. Minor concerns can be addressed before they blossom into greater problems, and both sides have an opportunity to ensure the contract is fair to them.

Ms. Drapeau-D'Amato also discourages long-term contracts in most instances. “What happens when there is a change to the practice environment? How can you anticipate a change for the better or worse?” she asks. “Contracts should always have a timeframe when the PA and Supervising Physician can sit down and renegotiate the terms. As a PA becomes more independent over time, it may be appropriate to increase the bonus percentage or vacation time, etc.”

“Smartly delineating a time frame, such as a year for example, in which your contract expires will allow a PA to leave on good terms in that your obligation has been met,” Mr. Roddick notes. “A contract that expires also forces the next contract negotiation towards reaping the rewards of hard work.” A common mistake made by PAs and Supervising Physicians during renegotiations is to compare the contract to others. “The variables that are involved are far too large to adequately compare your work with the work of another PA. Things like customer retention, satisfaction, ability to work well with office staff, flexibility, and medical abilities and skills have intrinsic value and are extremely hard to measure,” he adds.

“If a PA asks his/her Supervisor for more money because the PA down the street is making more, what is preventing the Physician from identifying a PA who is making less and comparing you to that PA?” Mr. Roddick asks. “A PA should get paid what he/she is worth, period. And as a result, contract negotiations should solely be focused on what it is that a PA brings to the practice and to the ‘partnership'.”

Once comfortable with an employer or practice, a multi-year contract may be acceptable—as long as it clearly states how compensation and benefits will increase anually, Ms. Jacobson suggests.

What if? The practice is sold.
Once a PA has invested a notable amount of time into a practice, he or she has a right to be concerned about the retirement of their supervising doctor or the sale of the practice, Mr. Roddick suggests. However, he says, “Contracting for part ownership or placing ‘umbrella-clauses' to catch the ‘what if' scenarios is tricky as it can often intimidate some physicians.”

Still, such negotations can be worthwhile. “I had advised a PA to form a contract that had an ‘umbrella clause' that covered a base salary for up to two years in the event the practice was sold, exchanged ownership, the physician retired, and/or the PA was fired for other than negligent reasons. In this scenario, it worked out perfectly for the PA, as the practice was expunged nine months after the PA had moved 600 miles and set up residence at the new job.”

What if? You want to expand your role and responsibilities in the practice (or not).
The contract must specify precisely the roles and responsibilities of the physician extender, describing in specific details if and how those responsibilities may change. For example, the contract should stipulate whether the PA will see medical or cosmetic patients or new or established patients. Responsibilities for call and hospital or nursing home consults should also be established. If the PA or NP seeks flexibility in practice, then the contract can outline if and when he or she can consider expanded responsibilities in the practice.

“I heard a story about a PA who took a job and after six months was told that she had to spend two days a week at a satellite office located 40 miles from her house,” Ms. Jacobson says. “Due to the fact that she had no contract, she had to comply, even though her employer would not reimburse her for gas, tolls, or time!”

What if? You want to “work” outside the practice.
Separate from restrictive covenants (see Sidebar at left), some contracts limit the PA's ability to work anywhere other than the contracting practice. The “spirit” of these restrictions usually is intended to prevent any potential competition with local practices. As such, a general contract provision against work “outside the practice” may be excessive. Suppose you wish to give an educational lecture at a local program sponsored by the state medical society or a pharmaceutical company invites you to participate in an educational program. What about opportunities to publish, consult, or serve on advisory boards? Or maybe, Ms. Jacobson suggests, you want to moonlight in the ER twice a month to keep your primary care skills sharp. If the contract states there can be no outside employment, these opportunities may not be available to you. It's better to address these possible scenarios during the negotiation period, so that there is clear direction regarding what is and is not permitted.

What if? You need to access patient records from a previous employer.
A PA could be sued for malpractice after leaving a practice. Access to patient records would be critical in such a scenario. “Suppose the former employer is also named in the suit?” Ms. Jacobson asks. “They could, in theory, try to pin blame on the PA, and could interfere with the PA's ability to mount a defense by blocking access to relevant patient records.” It's an unlikely, worst-case scenario, she admits, but it illustrates the importance of access to patient records. The AAPA recommends that all contracts contain verbiage ensuring that the PA will have access to records in the event of a malpractice case. Such a stipulation will avoid the time and cost associated with suing for access to the files.

What if? You need to conduct confidential patient interactions, complete paperwork, and conduct research.
Practices sometimes aren't optimally designed to accommodate a new physician extender on staff. In fact, one of the reasons some practices decide to bring on a PA or NP is because they are so busy their well-staffed operation still can't handle the patient demand. As such, there may not be an empty office or workspace available for the physician extender. At the very least, the physician extender needs access to a desk, computer, and phone in a non-public area of the office, and this should be outlined in the contract.

“I have worked at two fantastic dermatology offices in my career. Both gave me an office, a desk and one to two dedicated medical assistants. However, I once interviewed at a practice where the PA had a little folding desk shoved in the corner of the lunch room,” Ms. Jacobson shares. Besides the constant interruption associated with this set-up, the PA may not have felt comfortable talking to patients on the phone about private health matters or discussing management of a case with a supervising physician. Imagine the point of view of the patient receiving a call from the PA with the sounds of office lunch time in the background.

What if? You require support staff in order to work efficiently.
The PA should be assigned support staff in a manner similar to that provided to the physicians in the practice, Ms. Jacobson says, and the contract should establish this. In a majority of practices, that means the PA has at least one medical assistant.

Ms. Jacobson, who has two medical assistants assigned to her daily, observes that, “Working with a good medical assistant could allow you to see at least six more patients a day. Assume that you collect on average $100 per patient encounter—a low estimate. Also, assuming a cost of $12 an hour to employ a medical assistant, the office will spend approximately $25,000 a year to employ the medical assistant, while the six extra patients a day at $100 per patient encounter will generate $150,000 more per year in collections. Spending $25,000 to get $150,000 more in collections is well worth the expense.”

It is reasonable and common for physician or practice employers to consider the costs of your designated support staff and the supplies you use, along with your base salary, as a threshold for bonuses, Ms. Jacobson says. Costs not directly tied to you (front desk, billing staff, electricity) generally should not be considered.

Anticipating the Future
Discussion of contracts inevitably seems to focus on compensation. While this is indeed a primary aspect of salary negotiation (and covered in previous articles in Practical Dermatology), the contract serves many important functions. Overall, it guides the path of the physician extender in the practice and sets the tone for future collaboration.

The contract ought to anticipate key issues that may arise and set forth a plan for dealing with them. In the end, non-financial considerations can be as or more important than compensation. As Ms. Drapeau-D'Amato observes, “Every PA who is respected, treated fairly, included in office decisions, and comfortable discussing anything with his or her SP will be a very beneficial and lucrative member to that dermatology practice for many years to come.”