American Academy of Nurse Entrepreneurs

Collaborating Physician Part 2: Mindset and Money

In part 1, we covered the regulatory requirements of the collaborative relationship as well as risk involved. Now, let’s talk about the different options for compensating a collaborative physician.



Before we talk money, it’s imperative we discuss mindset. I don’t know about you, but when I started my first practice, I did not believe in myself (as a businesswoman, a Nurse Owner, or to be completely vulnerable – even as a person). I had thoughts like –

“Who am I to run my own practice?”

“Am I going to get in trouble?”

“I’m a nurse not a doctor.”

“I don’t deserve this.”

Thoughts like this get in the way of becoming a successful nurse owner. They also put you at a disadvantage when negotiating. 

Those thoughts form beliefs that make it very difficult to even approach a physician and ask them to collaborate, let alone negotiate reasonable compensation. Part of me felt my collaborating physician was doing me a favor even though I was paying her. 

So, what kind of mindset is best when negotiating with a collaborating physician? Believe that you deserve to negotiate for your needs. Doing so is not selfish or rude. It’s not a power play or fight. It’s simply the mindset of a healthy, well-adjusted adult.

Too often, I hear APN’s ask – “What are physicians charging for collaboration?” Don’t ask the physician what he or she charges. Instead, share a job description and what you are willing to pay. From there, it’s a simple negotiation.


There are four primary models for paying a collaborating physician: percentage of revenue, percentage of profits, fixed rate, and hourly rate.. 

Percentage of Revenue

In this model, the physician receives a percentage of all the money you earn before expenses

Sometimes this is set up as a fee per patient seen, which is a variable cost. Sometimes it’s set up where the revenue is totaled at the end of the month and the physician is paid the agreed-upon percentage. I’ve seen rates ranging anywhere from 10 to 50%. 

This model might be helpful as you’re getting started, but it likely won’t benefit you down the line and as your business grows.

The downside of this model is that the physician gets paid whether or not you make any money (AKA profit). As your business becomes more successful, your collaborating physician will collect a sizable monthly check without doing much additional work.

Let’s look at an example:

  • Agreement with collaborating physician = 10% monthly revenue
  • Monthly gross revenue = $20k 
  • Compensation = $2k/month

Does $2k for 1-2 hours of work per month seem fair and equitable to you?

It doesn’t to me. I don’t like giving a percentage of anything to anyone who hasn’t sweated by my side.

Percentage of Profits

The second model for paying a collaborating physician is a percentage of profits. This model is similar to the percentage revenue model, except expenses are deducted from revenue to arrive at profit before paying a collaborating physician. 

The benefit of this type of arrangement is that the physician doesn’t get paid unless your company is profitable.

However, like the percentage revenue model, the downside is that your collaboration fee will balloon as you grow.

Hourly Rate

The hourly rate model is as simple as it sounds. You pay the physician an hourly rate for work done. This is my favorite method of collaborative physician compensation.

The benefit to this type of arrangement is twofold–it’s simple and it’s familiar. 

It’s easy to determine a fair market hourly rate for a physician by searching the speciality and area.  Even though I typically offer a premium over the fair market rate, this method is extraordinarily affordable. In my area, for example, a locum tenens family practice physician earns about $125 to $150 per hour.  The best part about this payment model is that it makes for an easy, straightforward negotiation.

The downside is that the physician must track their time.  The good news is that this can be made easier by saving all your chart reviews and face-to-face meetings for a dedicated time at the end of the month.  

It’s my experience that the work of a collaborating physician can be accomplished in one to two hours per month. Keep in mind that time commitment  will vary by state requirements, as well as your comfort in providing care autonomously.

Fixed Rate

Fixed rate compensation means that you pay your collaborating physician a fixed monthly fee to cover all collaborative duties.

The benefits of this arrangement is that it is the most simple of all options, and at high volumes–this is often the most cost effective for the Nurse Owner. 

The downside is that depending on your negotiation skills this can be a burdensome cost at startup. One solution that marries the benefits of an hourly rate and fixed rate compensation is to start at an hourly rate at startup and then write into your contract that you will renegotiate for a fixed fee. This renegotiation can be dependent on time (i.e. 6 months) or patient load (i.e. reaching 400 patients, etc).

Final Considerations

Items for negotiation do not stop at compensation. You also need to consider malpractice insurance and an independent contractor agreement.

Malpractice Insurance

Most physicians will ask about malpractice insurance, so you need to be prepared to cover this topic.

If the physician is employed, their malpractice insurance will not cover them for collaboration with you. You’ll need to add the collaborator to your malpractice policy (some malpractice carriers like Berxi will do this for free), or if that’s not possible, you might consider a separate malpractice policy for the collaborating physician. If you find yourself in the latter position, you can buy a policy that is often termed a “medical director” policy. This type of policy is typically inexpensive, usually around $1,500 a year depending on state.

If the physician is self-employed and has their own malpractice coverage, it will likely cover them for collaboration with you, and no additional policy is needed.

Independent Contractor Agreement

The paperwork doesn’t end with the collaborative agreement. It’s also wise to have the physician sign an independent contractor agreement as well. 

The purpose of this document is to outline the responsibilities of each party within the relationship. It should include the work required, when the work is expected to be completed, compensation, when and how compensation occurs, and a clause for termination in the event either party wants to terminate the agreement. I recommend including a written termination notice of at least 60 days so that you have time to find a replacement collaborating physician if needed. 

Nurse Owner Tip – While many states do not allow corporations to employ (W2) physicians, APN’s CAN pay a collaborating physician as a 1099 contractor for the purpose of collaborative or medical director services.  

If you’d like a quick-reference guide for finding a Collaborating Physician, enter your email to download the Collaborating Physician Cheat Sheet for Nurse Owners below!

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