AMENDMENT TO PHYSICIAN EMPLOYMENT AGREEMENT
Name:
Contract Date:
This “ATTACHMENT A” may amend the base compensation in your Employment Agreement
and provides a detailed explanation of the PROVIDER PRODUCTIVITY INCENTIVE PLAN
based on five 8 hour days.
Base Compensation: $ _________ per contract year.
Incentive Program: It is the philosophy of CLINIC that PROVIDER reimbursement should fairly reflect the value that
each PROVIDER brings to the agency. Base compensation is remuneration for meeting minimum expectations of
performance in quality, patient satisfaction, staff satisfaction, and production. A base line or “budget” production
expectation is derived as described below. Value added by the PROVIDER to the agency above the minimum
expectation, up to and including a level of “excellence,” will be recognized and compensated through an accelerating
incentive plan as outlined below. The simplest and most robust measure of value added is through production figures
(patient encounters and Relative Value Units [RVUs]). Production figures also reflect directly upon the financial value a
PROVIDER brings to CLINIC. As CLINIC becomes more sophisticated in its ability to measure added value, the
incentive program may be enhanced to capture, and compensate, non-production value.
Base Line or Budgeted expectations: A minimum or baseline must be established for every measure of value or work.
In as much as billings and payments to the agency are proportional to production figures, the agency’s annual budget is
built around the minimum or “budgeted” production expectations of the PROVIDER team.
Encounter Budget: Contract PROVIDER is budgeted a minimum number of encounters per year of 3900. These
numbers were derived through benchmark studies of sister agencies, MGMA data, and minimum encounter levels set by
the Washington State Medicaid Program. Experience has confirmed that these are healthy levels for established
PROVIDERs.
Contract PROVIDER has a unique daily production expectation based on the number of days actually worked in the
clinic, divided into the encounter minimum (3900). Actual days per week worked [x] 52 weeks per year [–] vacation
days, 10 holidays, 5 CME days, and for the purpose of calculating the bonus we have built in six (6) administrative days
and three (3) sick days. Other sick time taken will result in an adjustment to the average encounters per day to make
budget.
An example for a standard full time PROVIDER would be as follows, assuming various budgets:
BUDGETED ENCOUNTERS PER YEAR
Weeks
Clinic days per week
Available Days
3900
52
5
260
DAYS ABSENT FROM CLINIC
Vacation
CME
Holidays
Administrative/Sick
Total Absent Days
Total Available Days
20
5
10
9
41
216
Average encounters per day to make budget
18.1
All production incentives are calculated from this base line budget number to the nearest tenth. At the beginning of the
contract year PROVIDERs have the opportunity to reduce their base line number by selling back vacation days or CME
days to increase the number of days in the clinic, thus reducing their base line budget. They can also agree to work
additional days in the clinic with the same effect. The example below recalculates the above base line by selling back 10
days of vacation for each contract year.
BUDGETED ENCOUNTERS PER YEAR
3900
Weeks
Clinic days per week
Available Days
52
5
260
DAYS ABSENT FROM CLINIC
Vacation
CME
Holidays
Administrative/Sick
Total Absent Days
Total Available Days
10
5
10
9
31
226
Average encounters per day to make budget
17.3
This “Sell Back” option must be exercised within 30 days of contract negotiation completion to provide the maximum
benefit to the PROVIDER. PROVIDERs may also “Cash Out” unused vacation days at the end of the calendar year at
their current daily pay rate per Vacation Policy and Procedure (2.4.2), but such a “Cash Out” will not impact production
expectations or incentives retroactively.
Base line Relative Value Units (RVU) are calculated using a rolling annual clinic wide average RVU/Encounter (1.3 per
Encounter) multiplied by the PROVIDER’s base line encounter expectation, which may be adjusted annually.
Production Incentives. All production incentives are calculated and paid monthly. The total number of days worked is
reported each month by the PROVIDER. This number is multiplied by the daily budgeted encounter expectation
(described above) to get the monthly minimum budgeted number of encounters for the month. This number is then
multiplied by the RVU/Encounter number, to derive the minimum budgeted number of RVUs for the month.
There are three bonus levels: 110% of budget; 120% of budget; and 130% of budget for either or both Encounters and
RVU. Since additional work above the cost of over-head (the minimum budget) brings in accelerating revenues to
CLINIC, the bonus accelerates as the work increases. The 110% level pays a possible 3% bonus for Encounters and/or
3% bonus for RVU. The 120% level pays a possible 10% bonus for Encounters and/or 10% bonus for RVU. The 130%
level pays a possible 20% bonus for Encounters and/or 20% bonus for RVU.
BONUS LEVELS
(Based on 40 hr. work week and 216 days per year)
Tier I Bonus
Base Expectation
Encounters/RVUs
Encounters/RVU’s
Daily Level
Compensation
Encounters
RVUs
3900
5070
18.1
$100,000 23.5
Bonus 3% +
Encounters
3%
RVUs
Tier II Bonus
Bonus 10%
Encounter
+
10%
RVUs
Tier III Bonus
Bonus 20%
Encounters
+
20%
RVUs
4290
5570
4680
6084
5070
6591
19.9
$3,000
25.9
$3,000
21.7
$10,000
28.2
$10,000
23.5
$20,000
30.5
$20,000
IN WITNESS WHEREOF, the parties have executed this Amendment to Employment Agreement on the date and year
designated below.
“EMPLOYER”
CLINIC, INC.
“EMPLOYEE”
BY:
Executive Director
BY:
Provider, MD/DO
DATE:
DATE: