Key Considerations for Neonatology Contracts

Neonatology agreements are for professional staffing and physician oversight of licensed neonatal intensive care units.  These agreements provide clinical coverage and administrative oversight of Level 2 or Level 3 neonatal intensive care units, or NICUs, by physicians trained in neonatology.  In some hospitals general pediatricians may provide some staffing, although in such instances a neonatologist is available for consultation at all times.  May contracts in the MD Ranger database pay medical direction only (78%).

Key Factors to Consider While Analyzing Neonatology Contracts:

  • Is the in-house coverage requirement greater than six hours per day or 42 hours per week?
  • Is the proportion of publicly sponsored or uninsured patients extremely high or low?
  • Are physician extenders used and provided by the physician group?
  • Are professional services provider for inter-facility transports to the NICU?
  • Are outreach services provided to other facilities?
  • Are teaching services required and included for academic training programs?

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Market Data Should Include the Most Helpful Benchmarks

Market data can be a fast, reliable, and cost effective way for hospitals and health systems to benchmark their contract rates.  

If the most important statistics go unreported, market data can be misleading and difficult to apply.  When you know what types of organizations are included within a particular data set, you can find facilities that pay physicians for comparable services.  When looking at surveys, make sure the hospital characteristics that are reported influence payment rates.  MD Ranger has found that the most significant factors influencing rates are trauma status, in-house coverage, and facility size. Urban and rural status can also make a difference.  Additionally, reporting down to the most specific physician specialty is very important.  Within surgical specialties, there is a huge variation in call pay, and some variation in medical director/administrative pay.

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Surprising (and Misleading) Facts About Market Data

Though it may have been decades since your college statistics course, being smart when it comes to data and data analysis is very important in business and healthcare.

Statistics can be confusing because it’s not always intuitive.  Given how much we love data at MD Ranger, we compiled a list of some surprising, and often misleading, facts about statistics.

  • It is possible for all the benchmark numbers to be the same except for the 90th percentile.

  • Example: If five different providers independently negotiate a rate of, say, $150 per hour, then we would report all four percentile values as $150. If the data consisted of four values of $150 and one of $500, then we would report $150 for the 25th, 50th, and 75th percentiles, and $325 for the 90th percentile (325 is midway between 150 at 0.80 cumulative weight and 500 at 1.0). Here’s a graph showing this:
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  • Although many specialties have the same hourly rate, the hours can vary drastically, making some medical directorships have much higher annual compensation.
  • It is possible for outliers to be irrelevant.
  • Many organizations don’t pay for a service, which means that any benchmark you find for rates might be too high.  This is why commercial reasonableness is an important first question to ask when setting rates.
  • When the range between each percentile is smaller and you are paying within the range, you are more protected from being non-compliant.  This indicates everyone is paying about the same amount and if you are paying in that range, you are paying market value.
  • Obviously, someone has to be at and above the 90th percentile but, an organization should have a very good reason for paying them that much.
  • The more data points included in a statistic, the higher quality the benchmark is.
  • Median numbers are more stable and less influenced by outliers than the mean.

MD Ranger’s team of statisticians understand the intricacies of calculating accurate benchmarks.  If you’d like to speak with someone on our team regarding physician contract payment market data and how we arrive at our benchmarks, email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Is the Market Data Collected Consistently and Comprehensively, and Is It Routinely Audited?

Market data can be a fast, reliable, and cost effective way for hospitals and health systems to benchmark their contract rates.  

Database construction and maintenance can mean the difference between accurate and inaccurate benchmarks.  Does the survey firm have rigorous collection and verification standards, and do they audit reported data?  How often do they survey?  Do they survey a variety of physician and hospital ownership types? Is all of a facility’s contract data collected or only ad hoc data? Look for consistent reporting methods, comprehensiveness across specialties and positions, thorough explanations of statistical calculations, and readily available demographic information on hospitals reporting data.  As a subscriber-based survey, MD Ranger collects all of a facility’s data, meaning we report on percent of facilities paying, as well as ensure that a variety of facility types are represented in our benchmarks.

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