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Today I received an email from a physician, who took over an urgent care center for a hospital several years ago. The urgent care center had been losing money for years, then she took over and rapidly catapulted it to profitability. Profitability was great because she had a contract that allowed her to take home any profits. Of course, the hospital administrators never really thought profits would happen; and at the outset of the agreement they would have been thrilled with the prospect of a breakeven urgent care center. But now there is a problem: the medical director of the urgent care center has become one of the highest paid employees in the hospital system.The hospital administrators no longer consider a breakeven urgent care center to be an impossible dream; they have it. Now they have to do something to eliminate this compensation aberration. They will move to drop the physician’s salary to bring it within the norms for an urgent care physician. What should she do? Below is my [edited] answer to her.

Dear Successful Urgent Care Medical Director:

What a problem! You were so successful in producing financial benefits to the hospital that the hospital must fix the problem of overcompensating you.

Dealing with the Hospital Administrator Mentality
This is actually a common problem. When centers are financial losers, hospitals are happy to sign papers to compensate physicians “as if” they were owners. In reality, however, they are not owners. Once an urgent care center develops great profitability, being treated like an owner will not fit with the hospital administration mentality. Hospital administrators cannot tolerate wages that are out of line with “prevailing wages”–even if they are resulting in significant profitability for the hospital. Hospitals generally see themselves as compensating physicians for job descriptions, rather than compensating a physician for the value added to the organization. Believe it or not, true business leadership often seems to be a liability in the hospital urgent care setting. The leader physicians either end up feeling undercompensated, or the hospital feels they are overcompensated.

You may negotiate with the hospital, but I suspect the end result will be that they will end up dropping your overall salary dramatically. The administrators will pat themselves on the back with their success–physician wages will be “within the norm.” If you decide to leave, by the time an accountant points out the red ink, the person responsible pushing you out will have been promoted to VP for her outstanding success in reducing wage costs (only slightly serious about that).

It is very rare for urgent care physicians to earn higher salaries than emergency physicians. Most urgent care physicians would be thrilled to have their salaries set at the prevailing salary for emergency physicians. Some sort of productivity bonus is common, but bonuses rarely will bring the physician salary to the levels you have enjoyed. Bonuses that result in salaries that are “out of line” seem to always come to an abrupt halt when the contract ends.

Urgent Care Medical Director Salary Negotiation
All that being said, you are starting with the average urgent care physician salary as a base for negotiation. Maybe the following points would provide a basis for negotiation:

  • Start with the base comparative salary they have offered (increase by ~10%)
  • Ask for a contingent revenue growth bonus
  • Ask for a personal productivity bonus, based on RVU production. If they balk, suggest that this can be given only for RVUs that are above the current average RVU at your center. Note: RVU-based bonuses are much
  • Ask for a medical director stipend (I have seen anywhere from $5,000 to $50,000). You may be able to use the average bonus for ED medical directors in your region
  • Assuming you have not signed an enforceable non-compete agreement, you may consider mentioning that you may “need to go out” and start your “own urgent care center.”

Joint Venture Urgent Care Centers
Another option would be to open further centers under a joint agreement. There are UCAOA members that operate under joint agreements, where they share risk and share profits. If you want we can put you in contact with them.

Start Your Own New Startup Urgent Care Center
If this still does not result in a contract that works for you, maybe the best long-term answer is to open your own urgent care center(s). Employees get guaranteed wages; but owners take the risk of losses and bet on profits. It is unlikely that any hospital will ever see you as an owner. If you lack capital there are experienced operators out there that will team with you for a percentage of risk and a percentage of profits.

Good luck! Feel free to call me with questions.

David

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