Glossary of Nephrology Terms

The team at DaVita SOURCE brings you a glossary of terms commonly used in nephrology searches and contracts.

ACCOUNTS RECEIVABLE (AR) – Money owed to the practice for services provided and invoiced.

ACO – According to CMS, an ACO is a group of “doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.”*

BUNDLING – Fixed compensation for dialysis services. Bundling does not affect the physician’s compensation.

BUY-IN – The financial investment in a physician practice for the purpose of becoming a partner or shareholder. When buying into a nephrology practice it is important to determine how the buy-in amount is calculated. Ask yourself what you will gain from the investment and if you will receive a return. For example: The practice is asking for a $100,000 buy-in. In return you will be an equal partner and will be on a productivity-based salary, share overhead expenses and receive 50% of any medical directorship revenue. The medical directorship revenue is valued at $100,000; thus, your share is $50,000 per year. It will take you two years to recoup your investment and three years to start seeing a return on your investment.

COMPOUNDED ANNUAL GROWTH RATE (CAGR) – An investment gain or loss over a period of time, usually a year.

COLLECTIONS – The act of recovering payment for services rendered.


CONFIDENTIALITY DISCLOSURE AGREEMENT (CDA) OR CONFIDENTIALITY AGREEMENT OR NON-DISCLOSURE AGREEMENT (NDA) – An agreement between two parties that creates a confidential relationship in which information is restricted from disclosure to outside parties.

EMPLOYMENT CONTRACT – The contractual agreement between employer and employee. Generally, it includes the terms of employment, salary and benefits, expectations of the physician, malpractice and tail coverage details, non-compete, termination clauses and length of contract.

GOODWILL – Intangible asset attributed to the practice itself or in combination with the physician’s efforts to build the practice. According to wikiHow when calculating goodwill, the price is always an estimate until the buyer and seller find some rational, that is, acceptable value.

H1B – A non-immigrant visa in the United States that allows employers to temporarily employ foreign workers in specialty occupations. There are no area restrictions for physicians with this visa status; however, they do require employment sponsorship.

HARD ASSETS – Tangible items or objects of worth owned by the practice or physician. For example, real estate, medical directorships, furniture, and computers.

J1 – A non-immigrant visa that allows non–U.S. citizens to obtain medical training in the United States. Following training, a J1 visa holder must receive employment sponsorship and is usually limited to working in medically underserved areas or academic/nonprofit organizations.

JOINT VENTURE (JV) – A business relationship between a physician and a provider in which they share ownership of a dialysis center.

LETTER OF INTENT (LOI) – Document to outline employment between two parties before the agreement is finalized. Usually not legally binding. The common purpose is to clarify key points of the employment offer, such as salary, benefits, partnership track timeline etc.


LOCUM TENENS – A Latin phrase meaning “to hold the place of”. For physicians, this is a doctor who works in place of the regular doctor when that doctor is absent or when a hospital is short-staffed.

MALPRACTICE INSURANCE – Insurance that helps protect physicians from the costs associated with defending against a claim of negligence made by a patient, and any damages that could be awarded.

MEDICAL DIRECTOR – A physician who is responsible for the medical care, guidance, leadership and quality assurance of a dialysis center. Qualifications:

  • Valid license to practice medicine in state of facility
  • Board Certified in Internal Medicine and Nephrology
  • At least 12 months of experience providing care to patients receiving dialysis

MEDICAL DIRECTORSHIP AGREEMENT – A contractual agreement between a dialysis provider and physician to provide medical director services. Remuneration is provided for the services of the physicians and is based on fair market value.

NON-COMPETE, RESTRICTED COVENANT, NON-SOLICITATION – The various terms used in contract law to ensure an employee or partner does not pursue a similar profession or trade in competition with the current employer or partner. This is a standard clause in any physician contract. The standard duration is two years, and usually has a mileage radius that is appropriate for the community size, and a buy-out option. Exceptions to the rule are J1 visa holders, who cannot enter into or be bound by a non-compete. A non-compete must be reasonable to be enforceable. Additionally, some states are not supportive of non-competes, such as California. Be sure to investigate this with your healthcare attorney.


OVERHEAD – Ongoing operating costs of running a practice. According to the 2011 RPA Benchmarking Survey, the national average overhead rate is 43% of gross income. Although the RPA reports the national average of overhead at 43%, it is important to note that multiple factors go into determining the financial health of a practice, therefore this one form of measurement should not solely be considered.

PARTNERSHIP – The business relationship formed between physicians in the ownership of a practice. Partnership can look different with each practice and it is important to investigate what it means for the practice you are considering to determine if it meets your personal and professional goals.

PARTNERSHIP CONTRACT – Similar yet different from the employment contract. Outlines the physician relationship with the other physicians and includes management/voting rights, compensation and benefits, expenses, termination, buy-outs, buy-ins, malpractice coverage, tail coverage, non-compete and more.

PRACTICE VOLUME – The amount of patient related work, i.e. inpatient census, hospital consults, office patients, dialysis patients (in-center and home hemodialysis, peritoneal dialysis) and procedures.

PTO – Paid time off or vacation time


RELATIVE VALUE UNIT (RVU) – A measure of value used in the Medicare reimbursement formula for physician services. The payment formula contains three RVU components: percent of the physician’s work, percent of practice expenses and percent of malpractice expense. From there it becomes more complicated. The three values for a given service are weighted by geography and multiplied by a Medicare conversion factor to determine the final price.

TAIL COVERAGE – Insurance coverage required when a physician leaves a practice, whether due to retirement, job change, relocation, separation or the buy-out of a physician shareholder.