Nurse Practitioner and PA Contracts: Key Terms and 2025 Compensation Trends

Advanced Practice Providers (APPs), including Nurse Practitioners (NPs) and Physician Assistants (PAs), are experiencing significant growth in both demand and pay. Healthcare systems increasingly rely on these skilled professionals to provide quality patient care, with NPs now earning an average of $143k and PAs earning $145k, according to salary data shared anonymously on Marit. 

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With APP salaries on the rise, professional contract reviews and compensation negotiations are more important than ever. The purpose of this article is to break down trends in APP compensation and the key elements of NP and PA employment contracts.

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The Rising Value of Advanced Practice Providers

Advanced practice providers (APPs) are seeing meaningful salary gains that reflect their expanding role in healthcare. Nurse practitioners, for example, reported a 14% year-over-year increase according to the 2024 APRN Compensation Report, with average earnings climbing from $121,000 in 2022 to $135,000 in 2023.

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Physician assistants are on a similar trajectory. The 2025 AAPA Salary Report found that median PA compensation rose 5.5% to $134,000 in 2024, with more than half of full-time PAs receiving a bonus that year - typically around $7,500.

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Geography continues to shape NP earnings as well. Those practicing in the Pacific region averaged $170,000, compared to $143,000 in the East South Central states – a gap tied in part to broader practice authority in places like California, Oregon, and Washington.

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Across the board, MGMA data confirms that APP compensation has been on a strong upward trend, underscoring the growing financial recognition of the vital role they serve in healthcare. 

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Understanding APP Employment Contracts: More Similar to Physician Agreements Than You Think

Many people believe that advanced practice providers don't require formal employment contracts or that their agreements differ significantly from those of physicians. However, Contract Diagnostics, a reputable physician contract review service with over 14 years of experience and more than 18,000 contracts reviewed, clarifies that this is a misconception.

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While nurse practitioners and physician assistants play distinct roles from physicians, their employment agreements often look strikingly similar. Today, detailed contracts for APPs are standard, typically running 15–20 pages and outlining many of the same provisions found in physician agreements.

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These agreements typically cover key topics, including compensation, termination policies, professional liability insurance, and restrictive covenants. Similar to physician contracts, APP agreements often include essential details about 'tail' insurance, productivity or quality bonuses, signing and relocation incentives, along with a comprehensive benefits package. Restrictive covenants, for example, can limit an APP from practicing within a set distance of their employer’s location for a defined period after leaving the role.

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Key Components of APP Employment Agreements

Compensation Structures

Modern APP employment contracts are evolving to be more sophisticated, especially in their approach to pay. While many APPs continue to operate with simple salaries, an increasing number are now exploring variable pay based on productivity. According to Marit data, salaried NPs earn around $140K annually, while NPs on a productivity-based model earn around $167K, reflecting how different compensation models can influence earning potential.

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It's imperative that the agreement clearly explains how your compensation is figured out, whether it’s based on a fixed salary, hourly pay, or a system that rewards productivity. Blended models are standard, too! Suppose you’re an APP interested in a pay structure based on productivity. In that case, it’s helpful to understand key metrics such as patient volume, RVUs (relative value units), and the revenue you help generate. While physician contracts often include detailed RVU formulas, agreements for APPs tend to use simpler productivity measures. However, this is gradually changing as the profession evolves and assumes new roles.

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Work Schedule

APP contracts generally specify daily work hours, weekly workdays, and the expected patient load. For full-time ambulatory APPs, typical schedules often consist of either five 8-hour days or four 10-hour days each week, making planning more straightforward. To keep things running smoothly, it's a good idea to allocate 30-minute slots for consultations and follow-ups, with daily patient numbers typically ranging from 15 to 20, depending on the practice setting and specialty. Hospital-based APPs tend to have more varied schedules, usually aligned with or complementing their physician colleagues, offering a flexible work environment.

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Supervision & Scope of Practice

It's beneficial to clearly outline the balance between independence and teamwork expected in the contract. This is especially important for nurse practitioners, as their scope of practice varies significantly depending on the state. In places where they have full practice authority, NPs can work independently – they can assess, diagnose, interpret diagnostic tests, and initiate treatments without requiring a collaborative agreement with a doctor. In other states, however, they must work alongside physicians under a cooperative agreement.

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Professional Development

When reviewing APP contracts, it's a good idea to see if they offer allowances for continuing medical education (CME). These often include 5 days of CME and are usually counted as part of their 20 to 30 days overall vacation.

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Liability Insurance

Another essential part of an APP contract is professional liability insurance. While APPs typically have a lower malpractice risk than doctors, it's still crucial to have adequate coverage. Ensure the contract clearly states whether the employer provides this insurance and whether 'tail' insurance is included for situations where employment ends. 'Tail' insurance, also called 'extended reporting period' coverage, offers protection for claims made after the policy expires, as long as those claims relate to incidents that happened during the policy period.

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Non-Compete Clauses

While restrictive covenants are a standard feature in many physician contracts, non-compete clauses are less common in APP agreements. That said, it’s still important to read the fine print carefully. Even a limited non-compete can restrict future job opportunities, particularly in smaller or rural markets.

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Concluding Thoughts 

As salaries for nurse practitioners and physician assistants continue to climb, APP employment contracts are becoming more complex and more important to fully understand. 

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In Part 2, we’ll dive deeper into the most common pitfalls APPs encounter in their contracts and share practical negotiation strategies to help you secure terms that support both your immediate pay and long-term career goals.

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About the Author

In 2011, Jon Appino founded Contract Diagnostics, a company that re-invented Physician Contract Reviews on a national scale. Since then, he and his experienced team have been dedicated to helping physicians navigate the contract and compensation side of their careers. They help many thousands of physicians and their families yearly, spanning nationwide and all specialties. His passion is educating physicians, so they can focus on what matters most - practicing medicine.