Contract Negotiation for Pediatric Nurse Practitioners

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.

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

For the full document go to Melnic Consulting Group including COST TO PRACTICE TO EMPLOY ARNP


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Jill Gilliland
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