Contract

Negotiation
for
Nurse
Practitioners

Authored by: American Academy of Nurse Practitioners Committee on Practice: Chair,

Margaret Friel, Staff Liaison, Jan Towers, Members: Lenore Resick, Mary Jo Goolsby, Evelyn
Jackson, Norann Planchock, Sue Tanner, Barbara Weis

American Academy of Nurse Practitioners, 2003

Contract Negotiation for Nurse Practitioners

Preparation is very important to the nurse practitioner hoping to conduct a successful interview and negotiate an
employment contract. When preparing for an interview, it is helpful to utilize ones personal, professional and
community network to gather information about health care practices in the area. It is important to be prepared
to discuss the financial benefits a nurse practitioner can offer to the practice as well as improved quality of care,
higher patient satisfaction and more flexibility for the physician. Spending a day observing a practice site can
help you make decisions regarding your participation in that practice.
A professional resume should be prepared and submitted at the time of the interview. Written employment
contracts are important, providing protection for both the nurse practitioner and the employer. Prior to signing a
final agreement, the services of an attorney with experience writing medical or nurse practitioner contracts
should be retained. In addition, the following factors should be considered.

1. Nurse Practice Act

Do your homework first regarding the state practice act.
a) Make sure you are familiar with the scope of practice in the state and the steps needed to be
legally licensed and to renew your license.
b) Be familiar with the regulations pertaining to nurse practitioner practice in your state where you
will be practicing.
c) Know the parameters of prescriptive authority in your state.
d) Know the collaboration (if any) requirements with physicians.
2. Practice Setting
Before scheduling an interview seek answers to the following questions:
a) What type of practice is this? Family? Specialty? Rural health?
b) Does this practice employ other nurse practitioners?
c) Does the practice accept Medicaid patients, Medicare Patients?
d) Is this practice supportive of the role of the nurse practitioner?
e) What is the reputation of the practice in the community?
Questions to be considered during interviews or negotiations are:
a) How much autonomy will you as a nurse practitioner have?
b) Will the nurse practitioner be recognized as a primary care provider?
c) Will you be able to practice at your full scope of practice?
d) What is the practice mix? Physicians, other providers, support staff?
e) What is the practices philosophy of patient care? Does the practice support patient education,
health promotion, and disease prevention? Does it participate in community outreach?
f) Is the practice site supportive of clinical research? Precepting students?
Participation in teaching or presenting papers or posters at conferences?
g) Will there be opportunities for hospital admissions? What is the reputation
of the hospital where you would be admitting patients?
h) What percent of your time will be directed toward administrative duties
and what will they entail?
i) Are there organization policies in place such as grievance procedures?
j) What are the expectations for taking call? Working evenings or weekends? Making hospital
rounds?
k) Are there any special skills or training required for this job? (e.g. suturing, ACLS)
l) Is patient satisfaction evaluated?
m) What method of performance evaluation is in place for the NP?
n) What kind of support staff would be suitable for you?

Personal Inventory
The following is a comprehensive tool that may be used to evaluate your needs and desires in an
employment or contractual arrangement.

PERSONAL EMPLOYMENT ASSESSMENT

1. I plan to join a __________________________ practice.
(Type)
2. I prefer a payment plan of salary only ______, salary with productivity based pay _______,
hourly contract _______.
3. I am willing to take call _______, willing to work evenings ______, willing to work week-ends
______, willing to make hospital rounds ______.
4. I am willing to travel ______ miles to my practice site.
5. Rate of the following in order of importance from 1-9 with 1 being the most important and 9
being the least:
a. Autonomy of Practice
________
b. Ready access to physician
________
c. Ready access to laboratory
________
d. Rural Setting
________
e. Urban Setting
________
f. Working with other NPs
________
g. Working alone
________
h. Autonomy of Patient Scheduling
________
i. Compensation
________
6. Rate the following (1) must; (2) would like to have; (3) not necessary
a. Benefits
________
b. CEU Allotment
________
c. Paid time off for attending professional meetings
________
d. Malpractice Insurance
________
e. Retirement
________
f. Profit Sharing
________
g. Professional dues paid
________
h. Flexible scheduling
________
i. Disability insurance
________
j. Paid personal days
________
k. Paid sick day
________
l. Paid vacation 2 weeks_______3 weeks_______4 weeks _______
m. Paid health insurance Personal________ Family ________
7. I am most comfortable working with those who exhibit the following characteristics:
___________________________________________________________________
____________________________________________________________________
8. My greatest strength is _________________________________________________
9. An area of weakness that I plan to change to a strength is _____________________
10. I plan to renegotiate my contract in _______________
Modified with permission from Wilson, Shala, ANP-C, CS (2001) Personal Employment Plan

3.

4.

Negotiation Tips
Negotiation Strategies include the following:
a. The goal to negotiation is to create a win-win situation. Each of you has something to offer
they a job, and you, your expertise. Look to see how you both can mutually benefit. That way
each of you wins.
b. If possible dont make the first offer; it is better to know what theyre offering in order to
present a counter offer.
c. If the first offer seems generous and it is to your liking, take time to think it over.
d. Know what will be the least you need in order to accept the job and what is considered your
walk away point.
e. Salary negotiations go hand in hand with your benefit package and hours of employment.
Negotiating Compensation
Determining Worth of Service: When negotiating contracts, it is important to determine both the
amount of income that the nurse practitioner may bring into the practice and the associated cost to the
practice. While there will be variability among practices due to the specialty, the location and the
outstanding debts of the practice, the following guidelines will help you determine what compensation
you might be able to contract.
The federal government focuses on three elements when determining compensation for medical
services provided: cost of service (the cost of compensating the clinician providing the service); the
practice overhead (includes utilities, rent, supplies, payment to support staff etc); malpractice
insurance. While the formula used for Medicare reimbursement has been based on a percentage of
48% service, 48% overhead and 4% malpractice insurance, these percentages may vary from practice
to practice. (See attached example from one primary care practice)
a. Ask for the percentage of practice income that goes for overhead expenses. Be sure to ask what
the practice includes in the category of overhead expenses.
b. Generally a private practice will wish to net some profit from you participation. A general figure is
15-20%. Determine if that is the case in the practice you are considering. Is this included in the
overhead cost quoted to you?
c. Determine if a percentage of your gross receipts are expected to be used for physician consultation.
(Seasoned nurse practitioners may expect to pay 10-15% of their gross receipts for this service.) Is
it included in the overhead cost quoted to you?
d. It will be important to be able to access your productivity data within the practice. Determine how
this will be accomplished in the practice site you are considering.

DETERMINING ARNP WORTH OF SERVICE

The data in this example was provided by a nurse practitioner employed in an internal medicine practice in a
small city in Kentucky. The income projected is based on the amount actually received by the practice for the
nurse practitioner visits. Twenty five percent of the patients have Medicare; 65% have a HMO or PPO; and
10% have commercial insurance.
The nurse practitioner saw 18 patients per day. Two were new patients; sixteen were established patients. Of
the established patients, two were Level 2 visits, seven were Level 3, three were Level 4, and four were
annual physicals (Level 5). There were also charges for two EKGs and three microscopic urinalyses.
The nurse practitioner generated income of $1075 per day - $5375 per week and $258,000 per year
(assuming 48 weeks worked).

The following chart illustrates the costs incurred by the internal medicine practice to employ the ARNP.
Overhead costs include additional supplies and equipment needed, plus two full-time employees at $10 per
hour to support the nurse practitioner (a nursing assistant and clerical help).
COST TO PRACTICE TO EMPLOY ARNP
Salary
FICA
Health Insurance
Malpractice Insurance
Continuing Education
401K
Professional org/license
Overhead
Expense to Practice
Income Generated by ARNP
Profit to Practice

$80,000
6,120
4,000
504
2,000
3,200
150
95,974
54,446
150,420
258,000
$107,580

Patient Care/Practice Expectations

a. Determine the number of patients the nurse practitioner is expected to see, remembering that a
new graduate will need more time in the first six months of practice. It will also help to find
out what the most frequently billed CPT codes are for the practice and the amount received for
those codes.
b. If you are expected to take call or make hospital rounds, determine what percent of the other
practice providers salaries are attributed to this activity. You would expect to receive a like
percentage if you take rotation with other providers.
c. If you are to be salaried and your clinical and administrative schedule requires longer days or
evening hours, you may wish to negotiate a half-day off/week to compensate for this time.
Bonus/Productivity Payment
a. Negotiating a bonus payment system may be important, particularly as the nurse practitioner
develops a large patient base. Bonus formulas can be based on productivity, quality, profit or
patient satisfaction. if a patient satisfaction based formula is agreed upon, using a satisfaction
tool is helpful in determining the bonus formula.
b. A productivity-based bonus may be appropriate if the nurse practitioner is on at least a 50%
fee-for service system. Formulas are usually based on number of patient visits per year. Quality
based bonus payments may be more practical under a capitated system where profit is
measured by maintaining high quality care in as few visits as possible. In this case bonuses
should be awarded for meeting or exceeding quality standards.
Profit Sharing
When negotiating profit sharing, it is important that the language regarding the
determination of the profit share is clear. It is important to negotiate the right to access the
company audit and a method for handling disputes.

5. Benefit Negotiations
The following benefits as a salaried employee should be included:
a. Health Insurance. Health insurance is an ever-rising cost of business. If you need family
coverage make sure that it is a part of your benefits, even if you would have to pay the
additional costs. Some employers also have dental and eye coverage for their
employees.
b. Vacation. Vacation benefits should include at least three to four weeks a year.
c. Sick Leave. Sick leave is generally two weeks or one day per month per year.
d. Travel. Ask about travel allowance if house calls or travel to other clinics is expected.
e. Continuing Education. Continuing education allowance and paid leave (one to two
conferences per year is not inappropriate; be sure to include enough in allowances to
allow for airfare, room and food for at least one national conference. (An allowance of
$1500 to $2500 for this purpose is not unreasonable.)
f. Malpractice Insurance. With malpractice insurance coverage, ask if it is an occurrence
or claims made type of policy and ask the amount of coverage. Negotiate for a
malpractice policy that is an occurrence policy for at least $1 million per claim and $3
million aggregate.
g. Fees. Membership in professional organization; licensure, and DEA fees should be
paid.
h. Subscriptions. Office subscription to appropriate nurse practitioner journal.
i. Retirement Plans. Retirement plans including employers contribution and years when
vested needs to be determined.
j. Disability Insurance. Disability insurance is a benefit you may want to negotiate,
especially if you are the major income producer in your family.
6. Contract Restrictions
a. Some employment contracts include a clause regarding restrictions on competition. A
restrictive covenant restricts an employee from setting up a practice within a specified
geographic area for a specified number of years. After leaving the practice the
concerns of losing business if an NP moves to another practice nearby has made this
inclusion a greater demand.
1.) Restrictive covenants are considered legal and can be enforced as long as they are
reasonable. If this covenant is challenged in a court of law, the judge will determine
the outcome. The judge will consider the needs of the public versus the harm to the
employer.
2.) The restrictive covenant may be a fact of life, so decide if this is an area that as a
NP you may be willing to give up realizing that you may have to trade-off other
practice opportunities in order to get a reasonable contract.
b. A contract may include language regarding termination clauses. A contract may list
specific reasons for termination with cause such as should the NP become disable, lose
their license, be convicted of a felony, etc. A termination without cause contract doesnt
give the NP any job security and is not considered prudent for a NP.
c. Avoid contract that include clauses that give the employer or contractor the right to
make modifications at their discretion without notice.
d. Avoid contracts that do not have renewal clauses.
e. A lawyer knowledgeable in contract law should be consulted.

References
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Authored by American Academy of Nurse Practitioners Committee on Practice: Chair, Margaret Friel, Staff Liaison, Jan
Towers, Lenore Resick, Mary Jo Goolsby, Evelyn Jackson, Norann Planchock, Sue Tanner, Barbara Weis