Fam Pract Manag. 2004 Apr;11(4):62-71.

Charging for missed appointments


Is it legal to charge a patient for a missed appointment? What is the best way to handle this?


There is no federal prohibition against charging patients for missed appointments. Moreover, the AMA states that it is ethical for physicians to charge for missed appointments, or for appointments not canceled at least 24 hours in advance, if patients are fully advised of the possibility of such charges. To help make these charges contractually enforceable, you should provide patients with a written notice of your policy. For new patients, consider obtaining agreement to the policy as part of the initial intake process by requesting their signature acknowledging the policy (e.g., when you collect their other personal information). For current patients, you could obtain this same acknowledgment prior to an appointment. Regardless, once on file, this acknowledgment helps to assure your charges are enforceable, and you should not need to obtain the patient’s signature again.

Before charging for a missed appointment, check whether your charge reflects your actual cost of the missed appointment as well as the patient’s individual circumstances. You should also consider whether you were available to the patient for the time that the fee was charged. For example, if you fill the appointment at the last minute with another patient, it could be argued that there was no loss, and, as a result, there should be no charge to the patient.

I recommend contacting your attorney to review your policy for missed appointments with your state’s laws in mind. For tips on how to decrease missed appointments, see “A Method for Decreasing Missed Appointments,” FPM, February 1997, page 77, and “The Outcomes of Open-Access Scheduling,” FPM, February 2004, page 35.

Financial arrangements for new physicians


Our hospital and independent physician group have been unable to reach an agreement on a financial arrangement for new physicians. In this situation, the group hires the physician and pays all expenses related to that physician but the hospital helps support the income guarantee. Can you advise us on the terms of a typical agreement?


In my opinion, there really are no typical financial relationships between hospitals and physicians anymore. Specific barriers to these arrangements include state laws, the federal anti-kickback statute, the False Claims Act and the Internal Revenue Codes regarding nonprofit entities. Because of the complexity and variability of these laws and the associated risk of fraud and abuse allegations, many entities contemplating such arrangements engage professionals in these areas to assist with the process.

In general, to achieve safe harbor protection, arrangements that involve remuneration provided by a hospital to recruit a physician must meet nine specific conditions outlined by the May 10, 2001, Office of Inspector General Advisory Opinion, which you can download as a PDF at It would be far simpler for any medical group attempting to recruit a physician to underwrite the business risk itself, rather than working with the hospital to do it. A hospital can underwrite other expenses under a separate arrangement with the recruited physician, such as, but not limited to, relocation expenses and headhunter fees. Certain hospitals may pay off or purchase a physician’s medical education debts and then forgive them. Forgiven debts of any type are generally treated as taxable income to the individual whose debt is forgiven, but if the relationship between the hospital and physicians are properly structured, the federal taxes may be avoided.

Another option is to simply let the hospital hire the physician. The group would still benefit from increased call coverage and could always offer future employment or business interest should the new physician bond with the community.

Compensation formulas


Is there a current compensation formula for a new physician with two years’ experience? How is productivity calculated?


There is not one generally accepted formula for determining a new or experienced physician’s compensation. However, a variety of surveys track physicians’ earnings. Merritt, Hawkins & Associates sponsors a Web site for residents and new physicians ( that features compensation surveys as well as a discussion of how physician contracts usually work. The annual compensation survey compiled by the Medical Group Management Association (MGMA) is widely respected and includes compensation levels for physicians with two years of experience or less. For example, according to the MGMA’s Physician Compensation and Production Survey: 2003 Report Based on 2002 Data, the median compensation for a family physician with one or two years experience is $136,320 with ob/gyn and $129,069 without ob/gyn.

There are many ways of calculating productivity. Relative value units (RVUs) are one popular benchmark because they measure the amount of work physicians do, not just the number of patients they see. Most compensation plans reward physicians for a variety of things, including group governance responsibilities, resource utilization and patient satisfaction, as well as RVUs. Depending on the efficiency of the practice, you should expect that 45 to 50 percent of your compensation will be based on your charges.

Malpractice insurance policies


I have heard of malpractice cases where the plaintiffs were awarded $10 million or a similarly large number. When the amount awarded exceeds that covered by a physician’s malpractice insurance, what happens? Could a physician’s assets be seized? What can we physicians do to protect ourselves?


If a jury awards $10 million in a malpractice claim, you could lose everything, or you could lose nothing. It depends on the state where you practice. In some states, your personal assets are not at risk in a malpractice suit. This is because these states provide an unlimited “umbrella” policy that protects physicians against claims in excess of their underlying insurance policy. In some states, your home is a protected asset; in some it is not. In some states retirement accounts and IRAs are protected; in others they are not.

I would advise you to 1) contact your malpractice agent to help you evaluate your risk and 2) consult with your estate-planning attorney to develop a plan specific to your state. To ensure you are getting the most accurate information, be certain that your attorney specializes in working with physicians.

* Denotes member of FP Assist, the AAFP’s online clearinghouse for consultants and attorneys.


Copyright © 2004 by the American Academy of Family Physicians.
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