Be clear about doc compensation-formula expectations

Compensation formulas are often a hot-button issue among physicians in group practice, and a recent lawsuit in Illinois illustrates how unmet expectations related to employment agreements can lead to ugly, expensive disputes.

After four years as a member of Chicago Lake Shore Medical Associates Ltd, Dr. Toral Patel is suing the 50-physician multispecialty practice for $220,000, alleging the practice charged her individually for overhead expenses that were supposed to be shared by the group, Crain's Chicago Business reports. The total amount Patel hopes to recoup includes $120,000 she paid the practice to be released from a 10-mile restrictive covenant upon leaving the group.

The trouble that led Patel to defect began about 18 months after she joined the group, when she agreed to give up an annual salary of $230,000 for production model under which she was reportedly told she'd earn about $350,000. The Crain's article doesn't indicate how much Patel actually earned following the switch, but it outlines Patel's complaints. Chiefly, Patel alleged that the practice wrongly charged her dermatology practice for lease payments on a StarLux laser system when the agreement stated the expense would be shared by the entire group. That and other improper charges cost her a total of $100,000, according to Patel's complaint.

Within her complaint, Patel also takes credit for expanding Lake Shore's cosmetic presence and increasing the group's revenue from Botox injections "exponentially" soon after joining the practice. But once Patel's earnings became linked to her production, she said the group no longer followed through on her ideas to attract more patients. "It made it impossible to grow the practice the way I wanted to," she told Crain's.

While the outcome of this case remains to be seen, it's instructive to groups and individuals regarding both design and communication surrounding employment agreements.

To learn more:
- read the article from Crain's Chicago Business

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