Many doctors seem to overlook the hazards associated with employment contracts that set a minimum wRVU (work Relative Value Unit) production threshold. Nonetheless, these agreements can harbor numerous traps.

What is the influence of the threshold?

The initial trap lies in understanding the implications of a threshold. Some contracts stipulate a salary “based on a minimum threshold of” a specified number of wRVUs. I have examined various agreements containing such provisions that lacked enforcement. Essentially, the salary is assured whether the physician achieves the threshold or not.

Conversely, several contracts offer a salary along with a minimum wRVU production threshold and specifically state that if this threshold is unmet, the salary might be diminished. The consequence of this clause is that the physician does not possess a true salary; rather, the physician is receiving a draw against projected future earnings and may need to pay back part of the salary if the wRVU threshold isn’t achieved.

Some of the issues associated with a repayment clause are clear. For instance, the physician effectively has no guaranteed income; their earnings depend entirely on wRVU production. Many physicians agree to such provisions because they are eager to work hard. This is commendable, but the fact remains that physicians can only care for patients who present themselves. If the employer fails to adequately market the practice, the physician will suffer from diminished productivity, resulting in a lower salary.

Recently, I reviewed a contract where a physician was both willing and able to expand the practice. However, the employer persistently set thresholds significantly exceeding historical production levels. Although in this instance, the thresholds were unenforceable, the employer attempted to introduce clawback provisions during annual renewal discussions, allowing it to penalize the physician for not achieving an unrealistic threshold.

This negotiation was particularly offensive since the physician had volunteered to commute significantly to substitute for a retiring colleague. Additionally, the physician was assigned to another site with a substantial client base. Nevertheless, the employer continually reverted the physician to the original site, which evidently lacked an adequate patient base (or more likely, sufficient marketing).

Ultimately, the physician began seeking other positions. We’re not finished yet; however, with an offer secured, I am cautiously optimistic about removing the threshold. Naturally, the physician has faced months of uncertainty in the meantime, so the “best case” outcome is not exceptionally favorable.

Is the threshold justifiable?

It is frequently observed that wRVU thresholds far exceed median productivity. This would be entirely reasonable if the physician’s salary were proportionately higher than the median. However, as you might anticipate, the high threshold is often associated with a salary that is median or below median. Medical Group Management Association (MGMA) benchmarks are valuable for assessing the threshold. MGMA offers benchmarks for salary, wRVU production, and compensation-to-wRVU ratios. If a physician is earning the median base salary, it is evident that any wRVU production threshold should not surpass the median. Unsurprisingly, this clear reasoning does not always register with hospital administrators.

Beyond comparing the threshold to MGMA benchmarks, it’s also beneficial to evaluate the thresholds against historical production. If a physician has worked at the same site for several years, the production history of that physician can be scrutinized. It is unreasonable to impose a threshold that significantly exceeds historical productivity.

Lastly, no physician should be bound to a wRVU threshold during the initial one or two years of their practice. An employer should not hire a physician and shift the risk of loss onto them. During the first year or two of a physician’s employment, they should enjoy a guaranteed salary. Naturally, a productivity bonus is acceptable (provided there is a reasonable productivity threshold).

Is the physician able to verify productivity computations?

While you seldom encounter the phrase “trust us” in a contract, many agreements include clauses that effectively compel the physician to rely on the employer for all productivity calculations. In any scenario where wRVU production influences the physician’s remuneration, the physician ought to have the right to verify the employer’s calculations.

When are the wRVUs “earned”?

This may seem like a ludicrous question, making it understandable for a physician to skip this section. Unfortunately, many initial drafts of physician employment contracts state that wRVUs are allocated to the physician when they are recorded in the employer’s billing system. One would assume that the employer would promptly bill for production. Generally, they do. However, I have seen instances where a physician’s productivity bonus was severely affected due to errors or deficiencies in the billing staff.

It is difficult to fault the hospital for prioritizing bills for six-figure ICU stays or for lengthy