Hospital Finances Physician Finances

How Should Physicians Negotiate With The Hospital?

A reader recently emailed me to ask how his hospitalist group should negotiate with the hospital to get paid to do extra shifts. It turns out that this is a great question and one that applies to any physician group that provides shift-work care: emergency medicine physicians, anesthesiologists, intensivists, etc.

There are many situations where physicians could be asked to work extra shifts: unexpected inpatient census surges, resignation or retirement of other physicians, maternity or paternity leave, jury duty, illness or injury, FMLA leave, etc. In a private group practice, the physician partners generally just distribute the extra work among each other and pay themselves accordingly. However, for hospital-employed physicians, there is usually a physician contract dictating the expected number of shifts each physician will work each month.

The COVID pandemic put a new wrinkle in work expectations for hospital-employed physicians. Hospitals faced loss of income from cancelation of lucrative elective surgical procedures and diagnostic tests. The hospitals had no money to pay for extra shifts. In addition, most hospitalists, intensivists, and ER physicians felt a moral obligation to work extra shifts to cover the surge in COVID admissions, even if it meant little or no extra pay. But the COVID pandemic is now receding and physicians need to recalibrate expectations for compensation for extra shifts worked. Each hospital is a little different and there are several variables that will affect your best course of action.

This post is directed toward hospitalists who are asked to work extra shifts but could equally apply to any other physician specialty that is employed on a shift-work basis. In preparing to approach the hospital administration about getting paid for extra shifts, there are a number of considerations that you need to think about.

Are there multiple hospitalist groups? If so, the hospital could play the groups against each other so it would be important to have a unified approach to the compensation issue around extra shifts.

Are you hospital-employed or employed by an independent group that then contracts with the hospital? This is essentially who writes your paycheck. If you work for a separate, independent group, then the best approach is to have the group’s CEO, manager, or attorney deal with the hospital executive director or hospital CEO. If you are hospital-employed, then it is usually up to the lead physician to do the negotiation.

When in the calendar year are the contracts up for renewal? If it is January 1st, then insist on including extra compensation for extra shifts as part of the written contract. If it is later in the year, then you’ll have to decide whether to negotiate an addendum to your current contracts or whether to wait until the next contract cycle.

When does the hospital do its budget for the next fiscal year? Most academic hospitals use July 1st to correspond with the academic year and the University’s annual budget but private hospitals may have their budget cycle beginning on January 1st or some other time of the year. It is much easier for hospital administrative leaders to include a line item on the budget for anticipated overtime expenses. If you try to negotiate after the hospital budget is completed, then the administrative leaders would need to use money in their discretionary/emergency funds to pay for it and the hospital leadership will usually be less open to doing this since they get requests from all directions for that money on an almost daily basis

What do the competing hospitals do? Find out what other regional hospitals offer their hospitalists for doing extra shifts. This information often has the greatest impact on how receptive the hospital administration is to paying for extra shifts. Hospital administrators love benchmarks so find compensation benchmarks wherever you can.

How willing/able are you to walk away. This depends on the size of your geographic region – if there are a lot of local hospitals and hospitalists are in high demand, then you have greater negotiation power, particularly if those other hospitals are offering richer contracts. See if other regional hospitals have posted job descriptions for open hospitalist positions that includes payment for extra shifts – presenting the hospital administration with these kind of documents can be pretty persuasive.

Can you re-structure your shifts to make doing extra shifts more palatable? Options could include having some of the day shift hospitalists leave when they get their work done, rather than waiting until a defined shift change-over time (such as 6:00 or 7:00 PM). To do this, you have to have 1 or more hospitalists stay until check out time to cover admissions, inpatient calls, etc. This can have the impact of then having short and long daytime shifts and you can use the hours saved during the short shifts to apply to extra shifts. This is entirely dependent on the preferences of the hospitalists – for many years, we had 2 hospitalist groups – one group wanted to stick with a set 12-hour shift model and get payment for extra shifts required for census surges. The other group wanted to allow some of the hospitalists to leave once their work was done in the afternoon, allowing those hospitalists to get home in time for their kids getting off school and daycare; these hospitalists worked more shifts per month but the average shift was shorter. Also, if you have 2 or more hospitalists covering night shifts, is it possible to convert one (or more) of them into a shorter swing shift – in most hospitals, the majority of the nighttime ER admissions come between 6 PM and midnight so it may be possible to use hours saved by shortening the shifts to use toward extra shifts.

Do you need to get paid to do extra shifts or do you need another hospitalist? If you are dealing with one of your hospitalists being out for 6 months on FMLA, it may make more sense to bring in a locum tenens for 6 months rather than spread the work out among the rest of the hospitalists. If the hospital census is growing, maybe you would be better off hiring a part-time hospitalist. One of our hospitalist groups had several “1099 physicians” who were on our regular medical staff but were independent contractors who the group could ask to do shifts here and there when needed and were then paid per shift worked, rather than a fixed annual salary (thus getting an IRS 1099 form rather than a W-2 form at the end of the year). The hospital administration is likely used to using “traveler nurses” to supplement the nursing staff so the concept of 1099 physicians will not be foreign to them.

How does the hospital deal with extra shifts for other physicians, nurses, and pharmacists? If these hospital-employed professionals get paid for doing extra shifts during patient census surges, then use this as a bargaining point to have a similar arrangement for the hospitalists. Also, how does the hospital deal with other hospital-employed physicians who do shift work (for example, anesthesiologists and ER doctors)? The hospital will likely want to have consistency so if they are already paying ER physicians who do extra shifts, then you can use this to justify your request.

Be sure you know what you are asking for. How much are you asking to get paid for working extra shifts? For example, if the original expectation is that the hospitalists work 15 twelve-hour shifts each month with a compensation of $325,000 per year, that works out to $1,800 per shift.  So, will you ask for $1,800 per extra shift worked or ask for time and a half at $2,700 per extra shift worked? Will you want more per shift for undesirable shifts such as night shifts and holidays?

When possible, make extra shift voluntary. Some physicians value money more than time and others value time more than money. Mandating extra shifts can be viewed as punitive whereas monetarily incentivizing extra shifts can be viewed as an employment perk by physicians looking to increase their income by internally moonlighting. At our hospital, we had some hospitalists who were happy to get paid to work several extra shifts per month and some physicians who did not want to work extra shifts, no matter how much extra they would get paid.

How does the hospital manage physician professional income? Know how much money your group brings in from professional billing  – few (if any) hospitalists can cover their salary by professional billing alone and so most (or all) require supplemental monetary support from the hospital. Know how much your hospitalists bring in per day shift and per night shift, particularly if the hospital is doing the billing for your doctors and the professional revenue is being routed through the hospital’s finance department. These data will dictate how much you will ask the hospital to pay for extra shifts. If extra shifts are required due to an unexpected inpatient census surge, then there will be additional revenue from physician billing during those shifts and this will offset the amount that the hospital would be asked to compensate physicians who work those shifts. On the other hand, if the extra shifts are due to a hospitalist being out on maternity leave, then the anticipated revenue from physician professional billing would already have been budgeted for and the hospital would need to provide more for physicians who work the extra shifts.

Meet with the right people. This requires you to know who in your hospital administration has the authority to make the decision. This is usually a hospital chief operating officer but could be the hospital CEO. Many physicians think that they need to approach the chief financial officer but the CFO usually just passes those requests to someone else, like the CEO. The titles vary from hospital to hospital so schedule a meeting with the person who can actually respond to your request.

Data, data, data. Go into this meeting armed with data about how many extra shifts are being done per month or per year, how many hours your hospitalists are working, etc. It is useful to have a benchmark for this, such as the annual MGMA physician compensation report that lists the average hours per week hospitalists work.

Beware of becoming a clock-puncher. Physicians have historically been considered professionals when it comes to employment models. That means that their workday ended when they got their work done, rather than at some specified hour of the day. On the other hand, hourly workers clock in and clock out, getting paid for the number of hours that they work per day. Physicians who work shifts fall into a gray zone between these. The danger of too rigidly demanding payment for extra hours worked is that you run the risk of ceding autonomy to the hospital administration. The hospital CEO does not punch in and out of a time clock at work and if the CEO considers you to be employed in a professional model, then the two of you can be on an equal footing in a negotiation. On the other hand, if the CEO considers you to be an hourly worker, then the CEO owns you.

Make the right kind of appeal. Making demands and threats to the hospital administration usually gets their defenses up and makes them resistant to monetary requests. It is better to appeal to their humanity and to preservation of hospital quality. For example, employee burnout is an existential treat to hospitals so consider opening your meeting with the hospital administrative director with something like “We’re really concerned about some of our hospitalists who are showing signs of physician burnout due to the extra shifts that they are required to do and we’re worried that it will affect their performance and affect patient quality of care. We need some help figuring out a way to address physician burnout.” If you’re lucky, the hospital administration will offer extra compensation and think that it was their idea (rather than yours).

Extra payment for shifts done to cover hospitalists who are out due to FMLA or sickness is tricky. If the hospital views the hospitalist group as an independent business entity, then they will view their deal is with the group to provide coverage for a specific number of shifts per month and it is up to the group to figure out how to cover those shifts when a hospitalist is out on maternity leave, illness, or injury. If that is the case, then the group needs to anticipate the average amount of FMLA and sick time per year and build that into the annual contract as a cost of doing business. If the hospitalists are hospital-employed, then you have more power to negotiate FMLA/sick time coverage since the hospital is the “business owner” of the hospitalists. Your hospital likely does not require its nurses to do extra uncompensated shifts when one of the nurses is out on FMLA and you can use that as a point in your favor when meeting with administrative leaders.

Most physicians are uncomfortable asking for additional compensation; we would rather ask for additional patient care resources, such as additional nurse practitioners, a new operating room, or a new MRI machine. Many physicians go through their entire career without ever asking someone for a raise. Consequently, negotiating with the hospital for compensation for extra shifts worked can feel foreign. The key to overcoming this is preparation and the considerations above will help you to be prepared.

November 6, 2023

By James Allen, MD

I am a Professor Emeritus of Internal Medicine at the Ohio State University and former Medical Director of Ohio State University East Hospital