Collection-based Compensation - Physician Contract Glossary

Collection-Based Compensation

Definition

Earnings tied to the amounts successfully collected for your professional services.

Examples in Context

“Physician shall receive 40% of net collections for all professional services provided each calendar quarter.”

“The employer will deduct 10% for billing costs before calculating net collections compensation.”

Implications for Physicians

• Motivates attention to billing accuracy and collections efficiency.
• Income may vary due to delays in patient payments or insurance processing.
• Physicians may need to monitor collection trends closely to ensure stable income.

Negotiation Tips

• Request transparent billing reports to track collections accurately.
• Clarify how refunds, chargebacks, or bad debt impact your earnings.
• Ask about overhead costs and ensure they are clearly defined in the contract.

Red Flags and Pitfalls

• High overhead deductions can significantly reduce your take-home pay.
• Ambiguity in defining "net" vs. "gross" collections may result in disputes.
• Contracts that don't account for delayed collections or non-payment risks.

Related Terms

• Formula Compensation
• Draw
• Stated Salary

FAQs

• "Do I share in overhead costs?"
  • Yes, overhead is often deducted before calculating your compensation. Ensure the contract specifies what costs are included.
• "How are insurance denials handled?"
  • Insurance denials may reduce net collections. Ask if your employer appeals denials and who covers the cost of re-processing claims.
• "What happens if a patient fails to pay?"
  • Most contracts exclude unpaid balances from your compensation. Confirm if you'll still earn for services provided regardless of payment status.

Legal Disclaimer

The information provided in this glossary is for educational and informational purposes only and should not be construed as legal advice. While we strive to provide accurate and up-to-date information, this content is intended to help physicians better understand common contract terms and does not replace professional legal guidance.

For personalized advice regarding your employment contract or other legal concerns, we strongly recommend consulting with a qualified attorney who specializes in physician employment contracts.

You can find experienced legal professionals through our Physician Contract Lawyer Directory.